Sands China's Valuation in the Post-Pandemic Macau Gaming Landscape: A DCF and Sector Analysis

The post-pandemic recovery of Macau's gaming sector has reignited interest in Sands China Ltd. (1928.HK), the region's largest operator. With the completion of the Londoner Macao Phase 2 expansion and a rebound in visitor arrivals, the company's financials have shown resilience. However, its valuation remains contentious. This analysis evaluates Sands China's intrinsic value using discounted cash flow (DCF) modeling and sector comparables, while addressing macroeconomic headwinds and competitive dynamics.

Discounted Cash Flow Analysis: A Path to Value

Sands China's free cash flow (FCF) has rebounded sharply post-pandemic. In 2023, the company generated $2.09 billion in FCF, a stark turnaround from the -$667 million in 2022, according to the SCL 2023 Annual Report. For 2024, adjusted property EBITDA rose 4.7% to $2.33 billion, driven by the reopening of hotel capacity at The Londoner Macao, as reported by AAStocks. Analysts project FCF to climb to $2.11 billion by 2027 and $2.68 billion by 2035, assuming continued recovery in gaming and non-gaming revenue streams, according to Simply Wall St.

Applying a DCF model, we estimate Sands China's intrinsic value by discounting these projected FCFs at a 9% weighted average cost of capital (WACC), reflecting the sector's risk profile. Assuming FCF grows at 8% annually from 2025 to 2027, 5% from 2028 to 2030, and 3% thereafter, the terminal value suggests a fair value of $45–50 per share (HKD 350–380), a 20–30% premium to its current price, according to a DCFmodeling estimate. This assumes the Londoner Grand Casino's reopening in early 2025 boosts GGR by 14% in 2025, per a Jefferies note.

Sector Comparables: A Mixed Picture

Macau's gaming sector trades at a forward EV/EBITDA of 7.7x as of October 2025, below its historical average of 11.8x, reflecting weak discretionary spending in China and geopolitical risks, according to Vici Insights. Sands China's EV/EBITDA of 13.18x appears richly valued compared to peers like Wynn Macau (8.0x) and Galaxy Entertainment (7.2x), as shown by StockAnalysis. However, this premium is justified by its dominant 23.1% market share in Q4 2024 and strategic investments in non-gaming amenities, such as luxury retail and entertainment venues, according to Macau Business.

Analysts from Jefferies and Morgan Stanley highlight Sands China's potential to outperform in 2025, citing its focus on premium mass customers and the completion of capital-intensive projects, in a CDCGaming brief. Galaxy and MGM China, while cheaper on EV/EBITDA, face margin pressures from promotional spending, which could erode their EBITDA by 2% annually through 2029, according to a Morningstar report.

Risks and Macro Headwinds

The analysis hinges on several assumptions. First, Macau's GGR must stabilize at 75–80% of 2019 levels, as weak Chinese consumer confidence and regulatory scrutiny could dampen demand, as warned in a CITIC Securities downgrade. Second, Sands China's capital expenditures-$4.5 billion from 2023 to 2032-could strain liquidity if FCF growth falls short of projections, per its investor relations material. Third, the sector's low valuation multiples suggest investors remain skeptical about earnings visibility, particularly as promotional costs rise to retain market share, as noted in a GGRAsia report.

Conclusion: A Case for Selective Optimism

Sands China's DCF-derived valuation implies upside potential, but its premium to sector multiples demands caution. The company's strategic positioning-leveraging its brand strength, expanding non-gaming revenue, and completing key projects-positions it to outperform in a recovering Macau. However, macroeconomic risks and competitive pressures necessitate a disciplined approach. For investors with a 5–7 year horizon, Sands China offers an attractive but conditional opportunity: its intrinsic value hinges on the normalization of Chinese outbound tourism and the successful execution of its capital program.