Sands China Ltd.: 'Worst Is Yet To Come,' Morgan Stanley Says

Las Vegas Sands Corp.'s (NYSE: LVS) Macau unit hasn't seen the worst of a business turn-down related to China's corruption crackdown, an analyst said Thurday.

Sands China Ltd. (OTC: SCHYY) posted a 3.3 percent third-quarter profit gain, but Morgan Stanley's Praveen Choudhary said the company is likely to face increasing pressure in the fourth quarter and beyond.

Sands, controlled by 80-year-old billionaire Sheldon Adelson, operates five properties at the former Portuguese colony on a peninsula near Hong Kong.

Choudhary said a downturn in so-called high-roller customers hasn't stabilized, while growth from the more proletariat mass market could drop "to the low single digits in the near term."

High-end gamblers account for about 60 percent of Sands China revenue and the segment fell 12 percent in September from the previous month, Choudhary said.

Further, Choudhary said excess supply of hotel and casino facilities in Macau could encourage further moves on promotional pricing, hurting margins.

Despite better-than-expected results, Choudhary maintains an Under-weight rating on Sands China and said the shares "valuation is still not attractive."

Sands China shares are down 30 percent in the past six months and traded recently at $54.70.

Las Vegas Sands changed hands recently at $62.50 per share, up 3.6 percent.