Here are some of the things I'm watching:
It was anticipated that the cotai strip sky bridge was to be completed by today, linking Venetian to Cotai Central via an air-conditioned walkway.
HSBC announced it's monthly PMI report for China manufacturing today... it read 51.5 I believe, which was the highest reading in over a year and a half stretching back to spring of 2011.
In November, advance airline reservations for the holidays were up 50% over 2011 and I assume a lot of that might be going to Vegas. Last week, we learned that holiday spending "tailed off" late in the shopping season, but it appears that holiday travel was still fairly robust.
The Junket-related VIP rooms in Venetian we're supposed to have their renovations complete by today. These were very extensive improvements that were attracting new, higher-end, junket aggregators and costing upwards of $150 million across the macau facilities. Q3 results were hurt by the fact that many of these suites were still out of operation at that time due to the construction involved.
Phase 3 of Cotai central is set to open in late January with 2,000 more hotel rooms and a ton of ancillary attractions. This will be the last new capacity to be opened in Macau until 2015, when Galaxy phase 2 is scheduled to be complete.
The 2013 allocation of new gaming tables should be awarded by march 1st and Sands is widely anticipated to get between 150 and 200 new tables pursuant to the legal ceiling not accomodating Cotai central's needs last September.
The new high-speed train from Beijing will be operational in January. Since train arrivals are primarily Mass market and since Sand's leads Macau in mass market share, this is a bigger deal for Sands than it is for any other macau concessionaire.
Most december channel-checks are indicating upward revisions in macau gaming revenues for december with mid-teens expected. This is material given that YOY comparisons to last december aren't that easy as december 2012 was up almost 25% over december of 2011.
The new government in China is re-asserting a pro-growth agenda that folks are estimating 2013 GDP to surge from the 7.4% we saw in Q3 to around 8.5 to 8.6% in 2013. China is also making it easier to get Visas to visit Macau by allowing folks to apply for them right at work instead of having to go to official locales to get them.
Ron Reese mentioned that MICE event scheduling for Venetian macau is strengthening with prospects that specifically inquire about the availability of hotel rooms. He also indicated that many MICE attendees who used to be housed off-strip are now able to stay (and play) on center strip while attending MICE events.
There were indications that many of the bad-debt reserves being booked at Marina Bay Sands were being goosed in Q2 and Q3 as a "pile on" to what essentially became "throw-away" quarters. Getting those reserves in place at that time allows LVS to keep them lower in 2013... and potentially even reverse them if collections improve with the region's economy(s).
Q3 was impacted heavily by Cotai Central's poor earnings, which were very much due to the fact that they were offsetting only C.C. phase 1's revenues with expenses relating to both phase 1 and a lot of pre-opening expenses for phase 2. In fact, it appeared that since Q3 was being dubbed a "throw-away" quarter, that many phase 2 costs that "could" have been capitalized were being expensed in Q3 just to keep them off the books and keep depreciation expenses lower in subsequent quarters. With phase 2 now open, new tables coming, and phase 3 complete next month, look for 2013 to be free of any of these financial encumbrances.
GLTA in the new year!
Today's excitement being generated by a slug of analysts and billionaire purchases of LVS stock seemed like a good day to look back at what many of us thought was so obvious on New Year's Eve.
With the Chinese economy rebounding, high speed trains launching, the new Beijing govt. in place, and Sands becoming the dominant, Cotai, Premium mass concessionaire, it appeared at that time as though the growth surge we're seeing now was inevitable.
When Venetian was first built, it was all alone out there on the Cotai landfill... and Steve Wynn was saying that Adelson's vision was "crazy". 2013 is the first year that Cotai's initial development surge is complete and Venetian stands at the center of 6, adjacent resorts (Sheraton, City of Dreams, 4-Seasons, Conrad, Galaxy and Holiday Inn).
2013 is the year that "critical mass" really begins to flex it's muscle.
... Q3's 7.4 to 7.9%. The Purchasing Mgr.s report also rose above 52 for January.
We won't know about Vegas' december holiday visitation for a few more weeks (given that airline advance reservations for the holidays were so strong in November) and whether people were spending or gambling that much.
I was looking at the long list of California casinos where house-banked blackjack is now offered. Gaming proliferation is definately impacting Vegas' gaming more than it's impacting all the other attractions of Vegas that keeps it a world class leisure destination.
That's a valid question given that Leven is also near retirement.
The logical successor is Rob Goldstein, who is LVS's most prominant rising star. Rob was top guy in Vegas until Jacobs was sacked, then he was promoted to global gaming chief. When I listen to the conference calls, Goldstein also impresses me the most with the insight that I detect in his commentary.
I also like David Sisk a lot, who was picked up from Wynn following Weidner's departure and brings a lot of Wynn's strategic thinking with him. He would be my vote for LVS's number 2 man once Adelson and Leven are no longer running things.
Because Singapore is a "city-state" that interacts in commerce with many countries, it's GDP can vary widely from quarter to quarter based on economic elements that would have little impact in other, much larger economies. In fact, Singapore's "micro" economic climate is often cited as unreliable as a proxy of the efficacy of "supply side" economics... an argument that is bunk when a moving average of GDP fluctuations is applied over multiple quarters.
Similarly, Singapore growth should be viewed as such a multi-quarter, moving average for most reasons as it's QOQ fluctuations can be even more deceiving than gaming fluctuations can be when left un-adjusted for "table hold" (casino luck or lack thereof).
The best way to appreciate Singapore and the efficacy of a supply-side approach to economic growth (eg: the exact opposite of Obama-style socialism) is to look at a 40 year time-lapse satellite photo of Singapore....
.... the visual growth of Singapore is absolutely shocking over that time period.
Nice post Spok! Long term consolidations can be trying for investors, albeit depending on one's time horizon and purchase price. LVS management continues building the bridge that drive strong underlining fundamentals to higher stock price.
I am still very long LVS & MGM stock. I've been waiting for increased volatility for long option buys that work with my investing/ & short term trading style.
... the overall reason that is true is because Sheldon Adelson always takes the long view. That's why he built the biggest casino-resort on earth all alone out on a landfill (venetian) and trumpeted what it would be 5 to 10 years down the road when Venetian would be the epicenter of Cotai and succeeding from the critical mass of everything that would be built around it.
You may be dismayed by interim results like the Q2 and Q3 numbers... but when you look past that at all the other Macau concessionaires that are clamboring to start building their off-strip resorts on Cotai, it re-inforces the reality that Adelson is visionary, in addition to being patient. The rest of the players in Macau are following his visionary lead.
2013 will not only be a year of new capaicty for Sands... but it will also be a year of "optimization" of all of the complementary facilities that it has built on Cotai's center strip. It will be about not only what Sands can do to optimize Venetian's historically under-utilized capacity with Cotai Central's ample hotel inventory... but it will be about how an off-strip resort like Galaxy can also feed patrons inward toward center strip and how they can be KEPT there until last-call.
4-seasons was just a Venetian accessory... Cotai Central is the first true "thrust" of Cotai critical mass. 2013 will be the year the company finds a multitude of ways to flex those fledgling muscles.
Hey Stealth, you announced you were officially a shorter.
Beijing bullet opened on 12/26, and has been successful ever since.
Gongbei LRT has been running in full capacity for 3 days now.
Tables are not immediate issue with SCC.
The floors are fully furnished. 1 big table with 2 dealers. "High Speed Bacarrat",
You forgot to praise Boehner trying to sabotage.
New table allocation is giant can of worms. There is just no clarity on how these tables will be dispensed so I think it would be foolish for LVS to expect them anytime soon. I feel the government realizes LVS's favorable lead in the region and will go to great lengths to allow competitors to catch up......hence the delay in Parisian construction approval, new table arrivals, and no apartment sales leading to the delayed St Regis tower. How will the government handle dispensing limited tables to the 3-4 projects projected to be finished around 2016? The government may elect to pool them all for future allotment. Regardless, I look forward to LVS's dominance over the next 3 years.
... and you're right... the SAR government may be semi-independent of the mainland government, but it is nonetheless no more predictable than the politburo is. Resort owners spew their expectations and anticipations all the time, but they're typically wishful thinking relative to reality... particularly in terms of "timing".
Re: the new tables, I get your point, but I see Cotai Central getting new tables for multiple reasons. First off, the 200 tables they've received for Cotai Central thus far, relative to C.C.'s massive size and multi-casino accomodations leaves them far short of what other resorts have received with far less capacity. Secondly, there are no other resorts opening new venues in 2013. Thirdly, Cotai Central meet's the government's desire for resorts to be less gaming-oriented and much more diversified with ancillary attractions and MICE facilities. Finally, and least importantly, is Sand's management maintaining that they will GET tables in 2013.
I agree with your point on Parisian and 4-seasons serviced apartments. My speculative opinion is that the delays are due both to the idea that Mr. Chui would like to give the other concessionaires a chance to catch up and woo some of Sand's big supply of construction labor... as well as them still smarting over the Steve-Jacob's fueled black eye they've gotten in the press over the past 18 months.
All the resorts that'll be opening in 2016 will be expecting new tables... maybe simultaneously. I think I read today that SJM expects 600 tables... again, pie-in-the-sky press releases that are so common in the SAR. MHO?... that Macau will stick with the annual new table growth restrictions, but relax them a little... maybe from the 3% annual growth currently in force to maybe 4 or 5% growth once all those new resorts near completion.
Either way, a supply crunch will jack table occupancy and table minimums for the benefit of all.
Great summary. Couldnt have said it better myself.
Do you know for sure if tables are due by March 1st or is that based on the suspicion of in the "1st quarter" as mentioned by macau officials?
Sentiment: Strong Buy