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Las Vegas Sands Corp. Message Board

  • bjspokanimal bjspokanimal Feb 19, 2013 12:42 PM Flag

    Today is Quite the Over-Reaction

    Virginia never quite learns that Lunar New Year is the one time of the year when the mass market booms in Macau, and the high-roller VIPs go elsewhere and do other things. It's always been that way... both in the weeks preceeding LNY, and during LNY itself.

    The reason is twofold. As advertised in the press, VIPs don't like big crowds and LNY has big crowds.

    What is less mentioned, however, is that LNY is traditionally a time for family and travel further from where chinese citizens normally go. If a VIP isn't with family, they're usually doing other things besides gambling and if they ARE gambling, they're more likely to travel for multiple days to more distant destinations... like Vegas, which typically does will with chinese VIPs during LNY. Chinese VIPs usually visit Macau in 1 or 2 day, fly-in/fly-out jaunts as a matter of course during less crowded times. Extended holiday periods are not when they usually like to go there.

    Still, the VIP disappointment during LNY this year appears to be more than expected. Maybe it was the spike in mass visitation that made it more distasteful to the VIPs... maybe it was the fear of a crackdown on laundering and the VIPs that took a pass were the ones that felt more exposed in that regard. I'd love to know if broken tooth experienced a bigger fall-off in business than AERL did... I'll bet he did.

    In the end, the anecdotal evidence of mass-market "visitation" and fully-booked CC hotel rooms says that maybe the gaming selloff makes a little sense... but not for Sands, it doesn't. It was already down a bit since the poorly-interpreted earnings report, and this just makes for a good entry point for those looking to buy a few shares.

    Spok

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    • southeast.asia@rocketmail.com southeast.asia Feb 19, 2013 1:00 PM Flag

      I took your advice before you posted it and I was curious if you could indemnify my .15 loss to-date?

      Seriously, how can cracking down on triads be considered a negative under any set of circumstances or a 2% to 6% GGR increase with a 21% market share in a mass rich environment be consider negative especially when combined with a continuing economic recovery.

      SEA

      • 1 Reply to southeast.asia
      • Good Point... a crackdown is not a negative from a longer-term perspective.

        We forget, sometimes, that when Portugal handed Macau off to China 14 years ago that the first thing they did was send in the cops and started cleaning up the gang activity. Macau exists today as a place that mass market mom and pops want to visit for more than a day simply because the triads have been sufficiently quelled over the years and reputable gaming companies operate there.

        In the end, Chinese law enforcement will focus any anti-laundering efforts on those elements that most flagrantly violate the statutes, and over the years to come, the results will be accretive to the compliance environment that results from that over the years to come.

        S

    • Local TV in Vegas said Chinese New Year gave Vegas a bounce. Baccarat revenues have increased.

    • Spok, I still have my questions about the genesis of this data. What is being presented is what appears to be estimates, mainly out of Nomura, which may be quite correct or way off base. They phone around and try to get guesses about visitation, etc. This is not the end-month numbers which are reliable. So, as I see it, one analyst has dropped a number and it is being picked up and amplified and passed along by others, gaining force as it goes. I mean, a poor month in Feb is a good story, so the media is loving this. And the shorts and MMs are happy to slam the sector, too, and pick up cheap shares.

      So, my honest belief is that this is all a big head fake, and that the upside move will be much more violent because of this. Wait till the 1 March reveal on Feb numbers! LPL

      Sentiment: Strong Buy

      • 1 Reply to lau_pai_lee
      • @ lau_pai_lee: It's valid that it's an estimate, but my experience is that such "channel-check" sampling methodologies are actually pretty accurate. If a major like Nomura puts it out, it's generally pretty bankable. Their sampling tools are pretty refined.

        A lot of VIPs were likely made aware of the fact that the new trains and border-gate accomodations were leading to an abnormal spike in visitation and simply didn't want to mix it up with that. There could also be table-hold issues and, of course, expense offsets against mass revenues are much less than those attributable to VIP so Sands likely exceeded performance-wise. Just the fact that Melco expected a coat-tail impact from Cotai Central illustrates just how well the dog that's wagging that tail is likely faring with the visitation spike.

        Given the Q4 revenue jump at sands, combined with the 54% volume surge at Marina Bay, I'm surprised that the stock can still be had in the low $50s given the new tables, sky-bridge, hotel capacity, inbound trains, etc. It's going to be a good quarter.

        S

 
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