Las Vegas Sands Earning Preview: Las Vegas Sands revenues will continue to decline in Q2’2016

July 25th, 2016 by Trefis Team
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Las Vegas Sands’ (NYSE: LVS) will report its Q2 2016 earnings on 25th July 2016 post market close. We expect results to be impacted by the continued weakness in Macau casino market. Overall Macau gaming revenues declined by more than 9% in second quarter, performing better than analyst estimates. The decline slowed from the first quarter of 2016, likely because of seasonal uptick in visitors with the start of summer vacations. Las Vegas Strip revenues declined by 1.54% in April 2016 and May 2016 which led to cumulative gross revenue declining by 1.43% (year to date till May 2016). However, the decline in May was sharper primarily due to the Floyd Maryweather and Manny Pacquiao boxing fight and the Rock in Rio music festival in Las Vegas in the prior year. Singapore, which contributed about 21.5% to LVS revenues in 2015, was also affected by decline in as Singapore gave up on Chinese high-rollers.

See our complete analysis for Las Vegas Sands’

LVS revenues will continue to decline but at a slower rate 

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LVS revenues in Q1 2016 declined by 9.8% over Q1 2015 and we expect the trend to continue in Q2 2016 as well owing to continued weakness in Macau and Las Vegas gaming industry..

We estimate that Las Vegas Sands’ Macau VIP gaming turnover (Rolling Chip Volume) will decline from $74 billion in 2015 to around $66 billion this year. However, we expect Macau mass market gaming drop (Non-rolling Chip Volume) to increase from $17 billion in 2015 to around $18.3 billion in 2016. Looking forward, we estimate the pace of decline in Las Vegas Sands’ overall revenue to slowdown in the near term, following the conclusion of Euro Cup and start of summer vacations.

 

Marina Bay Sands showing positive signals for Las Vegas Sands 

Las Vegas Sand’s EBITDA margin from Singapore operations were up about 100 basis points in 2015 and its hold normalized EBITDA margin from Marina Bay Sands increased by about 300 basis points in Q1 2016.  This is despite adverse currency effects and reflects its diversified and stable sources of profit from its operations. We currently estimate LVS Singapore revenues and EBITDA will increase slightly for the full year.

Overall, we estimate gross revenues of around $12.7 billion for Las Vegas Sands in 2016, with EPS of 2.58, which is higher than the market consensus of $2.44, as compiled by Thomson Reuters. We currently have a $56 price estimate for Las Vegas Sands, which we will update after the second quarter earnings announcement.

 

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Las Vegas Sands’

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