We look at some of the key factors that drive revenues for Las Vegas Sands (NYSE:LVS), one the leading gaming companies in the world. Under the leadership of Sheldon Adelson, LVS has clearly stood out among gaming companies in terms of exploring new regions for growth as well as strategy. Currently, it enjoys a dominant position in the Asian gaming industry with a strong presence in Macau and Singapore.
We have a $64 price estimate for Las Vegas Sands, implying a premium to the current market price.
Geographically diversified operations
- LVS enjoys a global presence with operations in Singapore, Macau and the United States. The diversified operations provide stable revenue and cushions the company from an economic crisis.
- Its existing duopoly with Resorts World Sentosa in Singapore offers enormous growth potential as it limits competition, at least in the near future.
- The Macau region is of utmost importance for LVS as it contributes more than 50% to its revenues. According to our analysis, LVS’ Macau operations contribute about 50% to its present valuation.
Expected completion of Cotai project by 2013
- In April, LVS launched first phase of Sands Cotai Central, its fourth resort in Macau. The resort, which is expected to complete in 2013, will have 5,800 rooms, about 300,000 square feet of gaming space and 1.2 million square feet of shopping, entertainment, dining and convention facilities.
- The resort would further strengthen its foothold in Macau. (See our previous post: LVS Expands In Macau With Sands Cotai Central)
Premium brand image
- LVS caters mainly to high-end gaming customers and is recognized worldwide as a premium brand resort. It has a sophisticated style and offers exquisite luxuries to its customers. For instance, Marina Bay Sands, which was built at an approximate cost of $5.5 billion, has seven celebrity restaurants with a 15 meter long rooftop swimming pool
- Similarly, LVS’ Paiza Club offers high-end services and amenities to VIP customers, such as luxurious suites, spa facilities and private gaming rooms. It also operates Canyon Ranch SpaClub operated by Canyon Ranch.
Vying for presence in other emerging areas
- LVS is eagerly exploring opportunities in other emerging regions, especially India, Japan, Korea, Taiwan and Vietnam. The company has a first mover advantage with its well thought out expansion strategies.
- Presently, it is working on building Europa Vegas, an integrated resort in Spain, which would give it access to European customers. According to reports, LVS has decided to spend about $35 billion on this expansion, which would constitute 12 integrated resorts of 3,000 rooms.