Investment Experts Maintain 'Buy' Recommendation for Las Vegas Sands, Regardless of Macau Performance
Buckin' the Odds: Las Vegas Sands' Fierce Fight for Success
Hey there! Here's a lowdown on the hot gossip in the gaming world, focusing on the titan Las Vegas Sands. Despite facing a slightly rocky start in Q1, these guys have kept their cool and have shown no signs of slowing down.
Analysts have kept their faith in Las Vegas Sands, despite the first quarter results in Macau falling short of expectations. The operator's performance in Singapore and its strategic moves have certainly been a crowd-pleaser.
In a surprising twist, Sands announced it's pulling the plug on its bid for a $6 billion casino at the Nassau Coliseum in Long Island and plans to sell its interests to a third party.
Now, on to the core highlights: John DeCree, CBRE's director of equity research, couldn't help but marvel at the smashing success of Marina Bay Sands in Singapore. The property chalked up a whopping $605 million of EBITDA, with margins galloping past 50%. The consensus was a measly $530 million of EBITDA, with the overachievement attributed to an all-time high in mass revenue and the launch of its new suite products.
The property's $1.75 billion capital-investment program is now in the bag, and the palace features a whopping 775 suites, up from a mere 150 at the end of 2022. The property managed to maintain its average daily room rates, just barely missing the fourth quarter's record of $927 by a hairline.
DeCree effusively praised the property, stating that the property held its own in the quarter, but Sands revised its expectations for rolling hold-adjusted win percentage from 3.3% to 3.7% (mainly because of player preference/game mix). He believes there's still plenty of potential for MBS growth in the near future.
Now, let's talk about Macau β where things got a bit muddled. Sands generated a respectable $535 million of EBITDA, mostly in line with a revised estimate of $531 million, but that was below the FactSet consensus estimate of $608 million. This was partly due to a lower-than-expected hold. DeCree speculated that the balance could be attributed to sluggish market growth, with total gaming revenue barely climbing by less than 1%. However, he was pleased about the comeback of The Londoner.
The situation in Macau has been dicey, but the Londoner is once again in action and poised to reclaim its lost territory. Analysts believe that the next 12 months will see LVS recovering its lost market share.
Analysts also pointed out that despite US-China tensions, LVS remains optimistic about its relationship with Macau, emphasizing a robust 20-year partnership built on substantial investments.
Jefferies analyst David Katz was slightly more skeptical, suggesting that the lower-than-expected Q1 results in Macau reveal the impact of growing competition. He expects the near term to reflect economic pressures but believes the strong outperformance of Marina Bay Sands will help make up for it.
DS Kim, an analyst for J.P. Morgan, was the most negative, stating that Sands' first-quarter results were "undeniably weak across the board, with lingering market share loss and poor margins." He acknowledged that these results weren't entirely unexpected, given Sandsβ underperformance this year, down by 35%. But he remains hopeful that expected Street earnings cuts may serve as a "clearing event," potentially allowing the stock's valuation to normalize as business momentum hopefully recovers gradually.
In conclusion, Las Vegas Sands is handling the ups and downs in the gambling world with its unique combination of strategic investment, vertical integration, and resilience. Despite some turbulent waters in Macau, the company remains positive and committed to its growth in both Macau and Singapore. The success story of Marina Bay Sands continues to power Las Vegas Sands forward amid the ever-changing tides of the gaming industry.
- Despite the geopolitical tensions between the US and China, Las Vegas Sands remains optimistic about its relationship with Macau, with a robust 20-year partnership built on substantial investments.
- In the casino-and-gambling industry, Las Vegas Sands has shown remarkable resilience, with Marina Bay Sands in Singapore generating a whopping $605 million of EBITDA, significantly surpassing analyst expectations.
- Analysts predict a likely recovery for Las Vegas Sands in Macau over the next 12 months, attributing the brief setback in Q1 to growing competition and sluggish market growth.
