Las Vegas Sands (NYSE:LVS) will report its Q4 2013 earnings on January 29. Macau gaming revenues continued their impressive run into the fourth quarter as visitors flocked to Asia’s gambling hub. Macau witnessed 11% jump in visitation during the Chinese Golden Week holiday in October.  We expect Las Vegas Sands to post solid results in the fourth quarter on the back of continued growth in mass-market gaming, which accounted for 27% of Macau’s gross gaming revenues in the fourth quarter.  Moreover, the VIP gaming market also grew by 15% during the same period.  It will be interesting to see how the company’s Singapore operations pans out as the economy contracted more than expected in the fourth quarter due to weakening of the manufacturing activity. We will also be closely watching for updates on the Japan casino plans. The company last month stated that it has dropped the plan to build $30 billion EuroVegas near Madrid in Spain and will focus on expansion in Asia (Read More – LVS Drops Spain Plan; Macau Growth Intact).
Macau Continues Its Impressive Run
Macau’s casino market smashed records and collected more than $45 billion in gaming revenues in 2013, up 19% from 2012.  The Golden Week holiday in October helped revenues surge 32% to $4.6 billion, the highest monthly figure on record.  In November and December, gambling revenue jumped 21% and 19% respectively, after events including an international boxing match and annual Grand Prix motor race led to an increase in visitation.  
The surge in Macau gaming will continue to boost the revenues of casino players such as Las Vegas Sands and Wynn Resorts (NASDAQ:WYNN). Las Vegas Sands benefits from its diverse properties in the region and commands a market share of close to 23%, only behind SJM Holdings. The company also has a presence in Cotai, which is now one of the popular areas in Macau. The company is developing a new resort in Cotai, which will further boost its capacity in the region. There is a very small percentage of population visiting Macau currently, and as the economy grows and the number of HNIs (high net worth individuals) increase, more and more people will visit the gambling capital.
Singapore’s Economy Contracts In Q4
Singapore’s GDP contracted an annualized and seasonally adjusted 2.7% in the final quarter as compared to the third quarter of 2013. This can be primarily attributed to 4% contraction in the manufacturing sector. However, year-over-year, GDP grew by 4.4% in the fourth quarter.  Singapore operations are important for Las Vegas Sands as they contribute more than 20% to the company’s value, according to our estimates. The hotel business in particular has been fruitful for the company. The occupancy levels are usually very high (99.8% in Q3) and the average daily rate (ADR) in Singapore is the highest for any Las Vegas Sands property ($401 in Q3). During the third quarter, Las Vegas Sands’ Singapore casino revenues also jumped by 33% to $628 million driven by higher Rolling Chip volume.  It will be interesting to see if Las Vegas Sands can continue to grow in the region. People from Southeast Asia often travel to Singapore for gambling. According to the latest data available, there has been 7% growth in international visitors in Singapore.  We expect the company to benefit from this as Las Vegas Sands along with Genting are the only two casino operators in the country.Notes:
- UPDATE 1-Macau gambling revenue hits record high in October, Reuters, Nov 1, 2013 [↩] [↩]
- VIPS, MASS MARKET, SLOTS AND ELECTRONIC TABLE GAMES: EVERYTHING’S UP IN MACAU, CalvinAyre, Jan 19, 2014 [↩] [↩]
- Macau’s 2013 Gambling Revenue Rose 19% to $45.2 Billion, The Wall Street Journal, Jan 2, 2014 [↩] [↩]
- UPDATE 1-Macau gambling revenue jumps 21 percent in November, Reuters, Dec 2, 2013 [↩]
- Singapore GDP contracts in Q4, hurt by sluggish manufacturing, Reuters, Jan 2, 2014 [↩]
- Las Vegas Sands’ SEC Filings [↩]
- International Visitor Arrivals Statistics, Singapore Tourism Board, Jan 24, 2014 [↩]