Marina Bay Sands: The Key Growth Driver for LVS, Supports $51 Estimate

+6.92%
Upside
51.70
Market
55.28
Trefis
LVS: Las Vegas Sands logo
LVS
Las Vegas Sands

Las Vegas Sands (NYSE:LVS) reported strong Q3 2011 results witnessing 26% growth in revenues as compared to Q3 2010. The growth was largely driven by LVS’s Singapore operations. Marina Bay Sands, its integrated resort in Singapore witnessed an increase of 63% in net revenues this quarter vis-a-vis Q3 2010. The integrated resort reported strong growth across all segments including casino, hotel, food and beverage and retail. LVS competes with Wynn Resorts (NASDAQ:WYNN), MGM Resorts International (NYSE:MGM), SJM (HKG:0880), Galaxy (HKG:0027) and Harrah’s among others.

We have revised our price estimate for Las Vegas Sands to $51, implying a premium to the current market price. LVS’s Singapore operations witnessed substantial growth in the first 9 months of this year, which exceeded our previous estimates. We have revised our numbers to incorporate the same.

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See our full analysis for LVS

Asia Fueling Growth Ahead

  • Presently, there are only two casino operators in Singapore, LVS and Genting Singapore. These casino operators were awarded casino licenses in 2006. Their duopoly over the casino industry in Singapore sure gives them more bargaining power and protects them from further competition. We believe in coming years, LVS’s Singapore property, would continue to be a strategic growth driver for the company.
  • LVS has a presence in Macau through the Venetian Macao, the Sands Macao and the Four Seasons Hotel. It is also developing the Sands Cotai Central, a 13.7 million square foot complex, expected to open in early 2012. The property will feature 4-star and 5-star branded rooms by Conrad, Holiday Inn, and Sheraton.
  • Macau’s casino industry is witnessing high levels of growth. For instance, its gross gaming revenues reached $8.6 billion in Q3 2011, representing a yoy growth of 48 percent. [1] A strong presence in Macau is strategically beneficial for LVS.

We do believe LVS is one of the best geographically positioned casino operators in the world. Its presence in Singapore and Macau, together with Las Vegas, provides it room for ample growth opportunities. This also provides it a strong cushion in times of global economic upheavals.

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Notes:
  1. See: Macau’s VIP baccarat revenue continues growing faster than overall casino industry, Yogonet.com []