Las Vegas Sands’ Earnings Jump 38% As Cotai Booms

Las Vegas Sands (NYSE:LVS) recently reported its Q1 2014 earnings. The company benefited from strong gaming volumes in Macau and reported a 49% jump in Macau EBITDA to a record $940 million in the first quarter.  The company’s Singapore operations saw a 10% jump in EBITDA over improved rolling chip win percentage. ^[1]

Las Vegas Sands’ consolidated revenue increased by 21% to $4.22 billion and earnings jumped 38% to $0.95 for the quarter. ^[2] Once again it was Cotai, which led the growth for the company. Revenues at the Sands Cotai Central (SCC) jumped 41% and operating income surged over 220%. We continue to believe that Cotai will remain the driving force for Las Vegas Sands in the coming years (Read More – Why Is The Cotai Vision A Boon For Las Vegas Sands?).

The company’s mass table wins in Macau for the quarter increased 54% to reach a record $1.34 billion in a market, which grew by 39% during the quarter. It must be noted that the mass-market segment yields significantly higher margins compared to VIP gaming. Going forward, mass-market gaming will be a key driver for future growth in Macau and for Las Vegas Sands.

We currently have $82 price estimate for Las Vegas Sands, which we will soon update based on the first quarter earnings announcement.

See our complete analysis for Las Vegas Sands

Singapore Operations Rebound

LVS’ EBITDA for its Singapore operations (Marina Bay Sands) increased by 10% to $435 million. While rolling chip volume declined 29%, rolling chip win percentage increased 0.9 points to 3.41%. This led to a 6% jump in casino revenues. Singapore’s hotel continued to do exceptionally well with 99.3% occupancy levels and 13% jump in ADR (average daily rate) to $428 for the quarter. ^[1]

Singapore’s economy itself grew by 5.1% during the first quarter as compared to the prior year period. ^[3] Singapore is the second biggest market for Las Vegas Sands after Macau, and constitutes roughly 18% of the company’s value, according to our estimates. It will be interesting to see how Singapore’s economy trends in coming quarters given that the nation is struggling with a labor crunch. The Monetary Authority of Singapore expects GDP to grow between 2% and 4% in 2014. ^[3] If the economy improves, Las Vegas Sands will see further growth in the region.

Macau Growth Continues

Las Vegas Sands continues to witness strong growth in Macau. It has four properties in the region and all performed well in the first quarter, especially SCC, which saw a 74% jump in non-rolling chip drop and over 100% surge in EBITDA. The casino giant has been consistently outperforming Macau’s overall gaming growth. Macau’s gaming revenues grew by 20% in the first quarter while Sands China saw a 35% jump in revenues. Las Vegas Sands has been able to establish a critical mass with its diverse portfolio of properties in the region and is benefiting from the overall gaming growth, especially in the mass-market segment.  Las Vegas Sands was quick to realize the potential of mass market gaming in China and has been aggressive on capturing that space. China itself is seeing growth in the number of HNIs (high net-worth individuals) and only a small portion of them visits Macau for gambling. ^[4] As China continues to grow, more people will visit Macau for gaming activities and Las Vegas Sands will continue to benefit from the rising demand. We continue to believe that Macau operations will drive growth for Las Vegas Sands in the coming years. We remain positive on SCC, which is clearly now the third property for Las Vegas Sands to generate more than $1 billion in annual EBITDA.

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1. Las Vegas Sands’ SEC Filings [↩] [↩]
2. Las Vegas Sands’ CEO Discusses Q1 2014 Results – Earnings Call Transcript, Seeking Alpha, Apr 24, 2014 [↩]
3. Singapore Maintains Currency Stance as Economic Growth Slows, Bloomberg, Apr 14, 2014 [↩] [↩]
4. The rise of China’s super-rich, BBC, Feb 4, 2014 [↩]