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Las Vegas Sands Corp. Message Board

  • bjspokanimal bjspokanimal Mar 27, 2013 2:35 PM Flag

    From a Motley Fool Commentary

    How do you know when to buy a stock before it "pops"?
    Easy. Look for some financial "disappointments" that are attributable to "growing pains" as the company builds a dominant empire in a high-growth industry/locale with limited supply... that's how.

    Las Vegas Sands had it's growing pains last year, and it's disappointing EPS reflects it. Cotai Central opened in "phases" with each incomplete phase piling "pre-opening expenses" onto the revenues produced only by already-opened phases... thereby trashing the development's earnings even as it's revenues surged nicely. Cotai Central only became 100% open just last month, and for the first time, pre-opening expenses will melt away and actual operating expenses will become aligned with revenues from ALL of the resort.

    Cotai Central is now also feeding patronage into Venetian's formerly "underutilized" attractions. Venetian's 15,000 seat arena and massive malls and convention facilities were always taking a haircut as a result of the dearth of hotel rooms on the Cotai Strip... no longer... as Cotai Central's 5,800 hotel rooms are twice the number that any other resort in Macau is able to provide and they are right across a skybridge from Venetian.

    Similarly, Cotai Central was previously Macau's largest resort with the fewest new gaming tables allocated by the government... just 200 tables for 2 large casinos... until last month, when C.C. received 200 more tables... 80% of the SAR's 2013 allocation. Revenues from those tables are only now cranking up for 2013's earnings pop.

    Even Singapore's Marina Bay Sands had a tough year in 2012 that's looking to substantially improve. In the 4th quarter last fall, Marina Bay's VIP gaming volumes surged an astounding 64% year-over-year... in improvement that would have spiked the resort's EBITDA by well over $100 million... except..... that the resort also posted the worst "table hold" (luck) in it's entire history.

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    • Part 2 of the commentary:

      Management downplayed the VIP surge to some degree, but Marina Bay's only singapore gaming competitor (RWS) also posted a large volume surge, providing some solid confirmation of the recovery there. Marina Bay also charged some large bad-debt allowances to the books, further supressing EPS last year... allowances that appeared to be large enough to cover 18 months of problem markers to the casual observer. If the year's a challenge, why not pile on, right?... and clear the decks for the following year.

      Also noteworthy was the $150 million "VIP initiative" in Macau, whereby Sands has been vastly remodeling VIP suites and welcoming eager new VIP junket aggregators to it's resorts. It's catalyst was the horrible destruction that Steve Jacobs did to Sand's junket operations but Steve Wynn's comments in Wynn's january conference call paid homage to the slick new competition in VIP. Those renovations were completed early this year as well... again... to feed Sand's EPS this year like they could only partially achieve in 2012.

      Warren Buffett was always good at looking for companies that were struggling... but which were busy re-organizing themselves and exhibiting substantial potential. Las Vegas Sands arguable spent last year doing just that... launching huge new capacity at the center of the Cotai Strip in a gaming enclave (macau) that won't be adding any new gaming capacity or resorts for at least the next 2 and a half YEARS.


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