Than the last time the stock dropped off from $62+...
The "last time" the stock ran up to $62 everyone thought china's economy was growing at better than 8.5%, not dropping off fast below their target. Very quickly thereafter, the bottom fell out of China demand for raw materials and the real estate sanctions told hold making it painfully obvious that things were slowing fairly dramtically for the chinese billionaires so fond of high roller gaming.
Since then, the Chinese economy is recovering sharply, the new regime is in place and Macau gaming revenues, visitation and length of stay are tearing higher -- record highs on all of that. Additionally, the new infrastructure improvements there are accelerating ease of visitation progress, and LVS, with the biggest, best and most alluring new resorts in the form of four more resort casinos in Cotai Center, the center of China's gaming megacomplex, is also are generating massively more revenues and FCF than they were prior.
Additionally, this year they are off to really easy comps on that economic strength and the expanded footprint, and MBS (Singapore is also generating superb FCF. That is not all, LVS is already pouring the cement for the newest showplace in Cotai Center -- another huge, spectacular gaming complex certain to attract even more high level VIP and high end mass players when done. All told, LVS is rapidly taking share from the other companies there... Wynn and MPEL's latest resorts show you that.
LVS is going to have a banner year there and throughout the next bunch of discountable years. Surely Shel and his family will continue to make sure their shareholders share mightily in the expanding free cash flow, and we all collect a 2.6% common stock dividend while we wait for special distributions serial good news on revenue, earnings and cash flow generation, and enjoy watching LVS outperform the group and the market.
The unhedged shorts can eff around until their heads spin... the real players have taken off the hedge shorts and are taking this up, hard, right after a few more days of toying with the gumps shorting in here. LOL
The first of 12 months of easy comps and excellent data for LVS is in prelim now...
See drjack's Stern Agee update today. Excerpt:
"Other Macau. Cotai Central continues its ramp, in our view. According to our checks, mass revenue and rolling chip were ~+10%/~+18% in January from December at Cotai Central. This compares to the MoM market results of +1%/-2%."
... although, I would temper it a bit... mostly sunny and sugar-free lollipops for me, I'm afraid.
I would add that the drop from $62 probably included some things like disappointment that the 19% market share of early 2012 tailed off somewhat during late spring and summer and was compounded, as you say so well, by the continued "soft landing" in China. The slow ramp of Cotai Central was also disappointing investors with outsized expenses for un-opened phases being piled up against thin revenues from the newly opened phase 1.
I would certainly take issue with your contention that the "chinese economy is recovering sharply"... as we've only seen a move in GDP from 7.4 to 7.9% so far and exports are expanding only in fits and starts. The PMI numbers are now above 50 for both manufacturing and services but they're nowhere near the 60 reading that would constitute a "sharp" recovery.
But this is not to quell optimism. I LIKE what the politburo is doing in this cycle because it's less likely to "flame out" like the 2010 recovery did due to over-heating. They seem determined not to let this one overheat and that's good for Sands because it would be nice to see a more "sustained" recovery between the time (now) that Cotai Central is fully opened and the day 2 years from now when the NEXT resort opens... which looks to be Galaxy Phase II.
2, full years as the one gaming concessionaire in Macau that has a bigger hotel inventory than all of the other gaming concessionaires COMBINED is a lot to be optimistic about... especially if the economies of the far east can put up a nice economic rebound of the sort that the U.S. economy can no longer muster.
Shel telegraphed this with his Villa rental... looks like macau and Spain will be his lasting legacy after all. He and Mike must be willing to pal around with Angela for the next few years. LOL
Seriously though, we've decided that the EU bank recaps, commitment to support Greece and the rest of Southern EU has made some buig strides since last year... more pointedly, we've decided that LVS is comfortable they have sufficient commitments to move forward and so we are going to stay aboard for the foreseeable future.
We also find huge comfort in the progress in Macau and with MBS as per the above... now get out of Penn and off we go!
Surprised to see the stock not responding more intensely... it may take a few days to sink in but this will be one huge footprint expansion and assure MANY years of high growth ahead for LVS while every other "competitor" wonders how they failed to be part of the landscape from the start.
LVS should now be able to move up quickly to $60... and up hard from there as the easy comps from macau roll in all year.
did you guys see this?
China said its exports grew 25 percent in January from a year ago, the strongest showing since April 2011 and well ahead of market expectations for a 17 percent rise, while imports [needed for construction/industry] also beat forecasts, surging 28.8 percent on the year... German data showed a 2012 surplus that was the nation's second highest in more than 60 years [so the EU is going to be alright].