Shares of Sands China Ltd soared over 6% on Thursday morning after an equity analyst report suggested the casino operator's stock is undervalued following its better-than-expected third quarter results.
According to Jennifer Song, senior equity analyst at Morningstar, Sands China's recent quarterly performance exceeded both internal and market forecasts. The company's strong showing prompted Song to maintain her fair value estimate for the stock at HK$26.50, implying over 30% upside from current levels.
Underpinning the undervalued view is Sands China's increasingly robust balance sheet position. As of the end of September, the firm's total cash holdings stood at US$1.9 billion, up significantly from US$1.1 billion a year ago. This improving cash strength could pave the way for Sands China to reinstate dividend payments as early as 2025, with Song projecting a potential final dividend of HK$0.50 per share for 2024.
With solid fundamentals and the prospect of shareholder returns on the horizon, the recent surge in Sands China shares likely reflects investors positioning for further upside as the undervaluation gap gradually closes.
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