More "Capital allocation: actively considering return initiatives
While LVS did not announce a special dividend/buyback in the PR, on the call, management said they are actively considering ways to return capital. No timeline was given, but the Board is in the “final stretch.” We see a buyback as more attractive, and it could be funded by both cash and possibly some new debt, which LVS indicated they may be considering. On development, we see limited progress in Spain, but do expect to hear more on Japan as the legislation heats up."
An excerpt "Price objective basis & risk
Las Vegas Sands (LVS)
Our $66 PO is based on 21x our 2014 EPS estimate of $3.12 and 14x 2014 EBITDA estimate of $4.9B. Our target PE multiple is in line with other luxury/growth comps, given a 40%+ three year EPS CAGR and PEG less than 1.
LVS free cash flow generation is improving, owing to a combination of continued mid-teens revenue growth, operating leverage, financial deleveraging and having a very low corporate tax rate, with a high earnings mix in Asia (where gaming taxes are the primary form of taxation, which is embedded in EBITDA). As a result, we think investor focus shifts from EV/EBITDA to a PE-driven approach on valuation and think this clarity will be an upside driver for the stock."
Headline of today's Shaun Kelley BofA Mll report. He talked much about returning capital to shareholders.
Having made over 50 trips to China I think that the best translation for this practice is "Gam bei."
The smart money sold 8million share after hours. The dumb money will buy in low volume driving the price up until 8pm Eastern when the AH market closes. The big money could not have dumped all of their shares AH because they would be competing with themselves in driving price down. It takes a few days to wind down large institutional positions. The carnage will continue for a few days.
If the AH drop was on small volume I would agree with your thesis. JCP traded 17million shares during regular market hours. So far during the after hours session almost 8million shares have traded. This huge AH volume indicates that institutions are selling. Tomorrow and over the next few days smaller investors will follow the herd. The carnage will continue for a few more days.
GRF and MRT thank you both for your great posts. I am excited about the comments on slots taking off. The "channel checks" do not take slots into consideration. Room occupancy, slots, mall retail activity and food service should really have a huge impact on LVS.
Thumbs up and thanks again!
If the table hold Gods are with us earnings will be grand slam rather than homer with no one on base.
I thank all of the legitimate posters and especially mba, bja, dab, orthoand most of the people responding to this post. I just signed in so I could give you all a thumbs up.
Please guys do not start board bashing. I think that there are very few legitimate posters on here that we should not complain about the good ones. Most of my favorite posters are on this post.
I have done business in China on the ground for over 20 years. I have made the trip over 50 times. The Credit Suisse report probably does reflect current feelings of factory owners. The problem is not a lack of export volume. There is major overcapacity of production. I remember visiting a factory for a day with an owner I had done business with for many years and noticed that right next to his factory, which was only running at 60% capacity, was a huge building being built. It was at least 4X the size of the factory I was doing business in. When I asked him what the building was being built for and who owned it he surprised me and said it was his. He was expanding his business. The only problem was that he did not have any new business in the pipeline to fill the new operation to capacity much less his old factory.
This type of thing was happening all over China. Money was no problem. He was driving a top of the line Mercedes. He is now running his old factory at less than 50% capacity and is running one shift in the new factory( they are designed to run 3 shifts) because his bankers forced him to run the new factory.
I have seen Shanghai go from bicycles and rickshaws to Buicks. The one thing that has not changed is the insatiable appetite the Chinese have for gambling. By nature they believe in good luck so gambling is a nice fit.
There is still uncertainty about the overall state of the Chinese economy. Credit Suisse put out a 10 pg note today about a tour they recently did of China. Below is the first paragraph:
"China Travels: A Softer Spring in the Step
After higher hopes, disappointment is setting in and supply looks set to outpace demand
Last week we visited a cross-section of industry leaders and experts in China’s north and east. After, in our view, the overdone optimism around the turn of the year, the mood in China’s industrial commodities space has turned less buoyant in recent weeks. Indeed, we found a more widely entrenched expression of disappointment in prospects for (relevant) economic momentum for the remainder of 2013.
While activity has clearly stabilized and improved on a year ago, the feeling is that advances ahead – i.e., in Q2 – are likely to be generally modest and largely seasonal in nature."
I am a long term holder of LVS and recently added in the high 40's. The only thing at this point that will give us a significant run up in price is unequivocal blockbuster 1Q2013 earnings. Of course a REIT announcement would work also.
Based on reports it looks like blockbuster earnings are in the cards if expenses are managed well and hold is is the house favor.
The manipulators have set this pattern but they need to back off once in a while because observers of the pattern will jump on and distort the algorthm.