Las Vegas Sands Revised Estimates And Outlook: Part 1
Big Upgrade from Trefis $57 from $48
Las Vegas Sands (NYSE:LVS) has seen strong growth in Macau driven by increased VIP and mass-market gaming activities. In addition, the company is developing a $2.5 billion resort on the Cotai strip, which will further enhance its capacity in the region. Gambling revenues in Macau rose by 15% in the first half of 2013, despite slower GDP growth in China. 
We expect this trend to continue due to the growing number of high net worth individuals (HNIs) in the region as well as gaming becoming a bigger part of the country’s culture. Gaming operators Las Vegas Sands and Sociedade de Jogos de Macau (SJM) predicted that Macau’s gaming revenue would reach somewhere in the vicinity of $80-$100 billion by 2020, as Macau’s market is currently reaching to a very small percentage of China’s total population.
Las Vegas Sands in particular is poised to benefit from the growth in Macau as it has established a critical mass with its diverse properties and resorts. Unlike MGM Resorts (NYSE:MGM) and Wynn Resorts (NASDAQ:WYNN), Las Vegas Sands is well diversified in different regions. It operates casinos in Las Vegas, Pennsylvania, Singapore and Macau. In light of the recent quarterly performance and the development of new properties in Macau, we have revised the Trefis price estimate for Las Vegas Sands to $57.
Macau Is Burning Hot
Growth In Economy
Macau is the only place in China where gambling is legal and its economy has been growing strong. Macau’s GDP in 2012 was up 10%, which was slower than 21.9% growth recorded in 2011 and 27.5% in 2010.  However, its per capita GDP has remained in the top 10 of world’s around 190 economies. For the first quarter of 2013, GDP in Macao expanded 10.8%. The strong economy will directly translate into higher revenues for the casino operators. Las Vegas Sands in particular will benefit from its vast presence in Macau with multiple properties such as The Venetian, Four Seasons, Sands Macao and Cotai Central.