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Macao Special Dividend Under Threat

A report by Morgan Stanley Research Asia Pacific said the Macao game company's special dividend could fall because the operator's free cash flow (FCF) returns, including capital expenditures on new properties, are lower than dividend returns for the first time.

"We believe the casino will likely cut its special dividend amid flattening or even declining interest, taxation, depreciation and amortisation earnings and rising Kotai facility investment [capital expenditure]," said a report by Praveen Choudary and Alex Poon in Hong Kong.

"For the first time, we saw a trend of FCF yields below dividend yields," the authors added, confirming a trend that began at the end of the first quarter of this year.

Free cash flow return refers to the amount of free cash flow per share (usually excluding capital expenditure from operating cash flow) that a company is expected to earn compared to market price per share. Dividend yield refers to the amount that a company pays as dividends annually to its stock price.

The research team added that the Macau casino industry's net cash position is declining.

"Net cash in the industry is down about 40% compared to the end of 2013. Wynn [Macau Ltd] has shifted to a net debt position for the first time since the first half of the year," the Morgan Stanley report added.

Win Macao was one of the pioneers of random dividend payments among Macao names. In November 2011, the company said it would pay its first special dividend, HK$1.20 (US$0.15) per share. 바카라사이트 추천

In January 2012, Sands China said it would pay its first interim (i.e., non-discretionary) dividend of HK$0.58 per share. In its second quarter 2014 earnings release, Chairman Sheldon Adelson said it had paid dividends worth $1.5 billion to Sands China shareholders, not Las Vegas Sands shareholders, over 10 fiscal years to June 30, 2014.

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