Analysts say Marina Bay Sands can continue to break records
Marina Bay Sands (MBS) reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $432 million for the quarter. But at least one analyst thinks Las Vegas Sands (NYSE: LVS ) venues can do better.
MBS continues to deliver impressive financial results, CBRE research analyst John DeCree said in a recent note to clients. This is because the number of Chinese in Singapore is only half what it was before the coronavirus pandemic. If that ratio increases, the city-state's two integrated resorts - the other being Resorts World Genting Sentosa - should benefit.
Additionally, the ongoing construction hiatus on the casino floor is coming to an end and 200 high-end suites will come back online, allowing MBS to increase pricing and serve higher-value customers,” DeCree wrote.
Marina Bay Sands is the only LVS property outside of Macau and one of the most profitable casinos in the world. It is competing with fellow Sands venue The Venetian Macao for the top spot.
Marina Bay Sands still has room for development
DeCree appears to be right in his assessment of Marina Bay Sands' upside potential. During Sands' recent Second Quarter Results conference call, Chief Financial Officer Patrick Dumont noted that the operator is making significant investments in its casino resort in Singapore.
The costs also include improvements to Towers 1 and 2. These improvements have not yet been fully implemented and, if implemented, will likely result in improvements in hotel margins and EBITDA.
“Our largest suites, the 200 multi-day suites, are the last to come online. That’s what will happen this quarter and next quarter. Only when those suites come online will all of the renovated Towers 1 and 2 That's when the profit potential is really realized, so we're working without them," Dumont said by phone.
MBS' second-quarter EBITDA of $432 million is on track to meet Sands' annual EBITDA target of $2 billion this year. Gross gaming revenue (GGR) generated by mass market bettors was $580 million in the June quarter, up 36% from the same period in 2019.
Sands is optimistic about Singapore
While Las Vegas Sands is often viewed as the story of Macau, there's no denying the importance of MBS to the overall investment thesis. The operator's commitment to Singapore is also undeniable. Dumont noted that Sands has "very strong feelings about the future success of this city-state."
The market has "got better". We invested heavily and created what is probably the best product we've ever had. The response from customers has been overwhelming, but we are still in a tough spot,” he added.
Marina Bay Sands is an integral part of Singapore's business and leisure tourism industry, and the Sands benefits from its presence in Singapore. The city ranked ninth in the world in tourism spending last year, according to the World Travel and Tourism Council (WTTC).
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Source: www.casino.org
