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Las Vegas Sands Corp. Message Board

  • mrtaxx mrtaxx Mar 20, 2013 1:43 PM Flag

    Forbes Article: Trefis PT $48?


    Las Vegas Sands Winning Bet Comes From Doubling Down In Macau
    Trefis Team, Contributor 3/20/2013
    A little less than 60% of Las Vegas Sands’ value comes from its operations in Macau, which has a gaming market almost five times the size of Las Vegas and is still growing. The U.S. gaming and casino companies are looking to accelerate their expansion in this region as the Las Vegas strip becomes saturated. Compared to its peers, Las Vegas Sands is doing better in Macau which is evident from its results and the growing contribution of Macau in the company’s overall profits
    Let’s take a brief look at how Macau’s overall market is doing and how Las Vegas Sands is performing within that market.
    How Is Macau Doing Overall?
    Macau’s casino industry earned close to $38 billion in total revenues in 2012. This figure is not just substantially higher than that for Las Vegas, but also higher than the figure for the total U.S. casino industry. Macau’s casino gaming revenues grew by 13.5% in 2012. While the growth slowed down compared to that for 2011, it still remained healthy. A slowdown in China’s economy impacted the VIP market, but the mass market continues to grow at a fast pace. Compared to 2010, Macau’s casino gaming market grew by 42% in 2011.
    China has a huge population and the growing middle class and improving economy will continue to drive the casino industry’s growth in the region. It makes sense for Las Vegas Sands and others to aggressively invest in this market to build a solid foundation for future growth.
    Las Vegas Sands’ Integrated Properties In Macau Are An Advantage

    Unlike its competitors, Las Vegas Sands
    Unlike its competitors, Las Vegas Sands hasn’t experienced slower growth in Macau despite a slowdown in the Chinese economy. We believe the company has established a critical mass in the market with its properties and resorts and that has helped it take market share away from competitors such as Wynn Resorts.

    Compared to 19.3% in Q3 2012, Las Vegas Sands’ share of gross gaming in Macau increased to just over 21% in the fourth quarter. This comes as some respite as growth in Las Vegas and Singapore remains soft. While the Las Vegas market is saturated resulting in lower profitability, Singapore continues to battle slow economic growth and tighter administrative restrictions on gambling.

    In Q4 2012, Las Vegas Sands saw the rolling volume grow by 37% compared to the same quarter a year ago. Additionally, its mass market table win grew by more than 50%.The company is focusing on integrating its various Macao properties including Sands Macao, Sands Cotai Central, Four Seasons and The Venetian. Another establishment, The Parisian, is expected to open by late 2015, as per management.

    However, the Macau gaming market is VIP-centric. The majority of the revenue comes from high rollers or VIPs, accounting for about 70% of Macau’s total gaming revenue.This section has suffered losses due to the slowdown in China’s growth. Nevertheless, Las Vegas Sands has expanded rapidly in the Macau region and developed a portfolio of properties to control a significant portion of the market. The market growth remains robust despite some economic headwinds.

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    • Either the article is severely outdated or they are really out to lunch. Id email and ask them.

      • 1 Reply to orthokneepa
      • I think Trefis is one of those highly-automated, robo-raters where the computer sizes up the mostly trailing metrics and does a SOTP workup on them to establish a price target. Thus, their commentary is very positive but their price target is low... possibly overweighting LVS's sub-par 2012 EPS and P/E without regard for bullish guidance for 2013.

    • A glowing report... yet a $48 price target.

      Couldn't help to notice that they refer to Singapore as "soft" even though VIP gaming volumes surged there in Q4 by 64%... an outstanding indication of "demand trends" even though the lowest "table hold" in the resort's history negated the impact of the volume surge.

      2 points to make about that VIP gaming volume surge in Singapore: 1) Singapore's other gaming resort, RWS, experienced a similar surge, thus diminishing commentary that VIP gaming is "thin" and subject to wide fluctuations from quarter to quarter. The similar RWS surge indicates that the volume surge was more widespread and thus more likely to be sustainable; 2) Volume is more of an indicator of customer demand whereas table hold is simply a measure of how lucky the resort was with the bets being placed.


      • 2 Replies to bjspokanimal
      • Taxx, my thinking is that Trefis's computers extrapolate past EPS and EBITDA trends out into the future. Last April, China's economy hadn't cooled completely yet during the course of Q1 and good table hold combined with other modest strengths allowed LVS to cap a great "earnings momentum" period with it's 70-cent EPS number for Q1-12. If Trefis was inclined to think that such EPS growth would continue last April, particularly in light of the impending phased opening of Cotai central, then I could see where they'd get a PT of 63 bucks.

        currently, LVS has just completed 3 quarters of earnings disappointments in spite of other operating and financial metrics that are quite optimistic. Extrapolating the last 3 quarters' EPS to formulate a price target might conceivably produce a $48 price target.

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