Las Vegas Sands Earnings Preview: Macau Rebound To Build Growth Momentum

by Trefis Team
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Las Vegas Sands (NYSE: LVS) will report its Q2’17 earnings on July 26, and we expect the company’s revenues to grow by nearly 20% this quarter. The rebound in VIP gambling in Macau has been particularly impressive after the softening of the corruption crackdown movement of the Macau government. LVS is likely to win big from the improved fundamentals, but may also feel the impact of increased competition and a portfolio shift towards mass market gaming. LVS’s Singapore operations earnings surprised many in Q1’17, and we expect that momentum to sustain this quarter.

Macau Market Rebounds Strongly

In the second quarter of 2016, LVS net sales declined by nearly 10% despite outperforming the Macau gaming industry. Macau gaming industry revenues declined by nearly 12% in Q2’16 due to the crackdown, but in Q2 2017 Macau GGR grew by more than 22%, primarily due to an increase in VIP gaming activities. The operating performance of Wynn’s new casino in the Cotai strip has been solid over the last few quarters, despite the increased competition in the region due to the opening of Wynn Palace. We expect LVS’s revenues and profits to see double digit growth this quarter due to the improved conditions in Macau gaming, the rebound of VIP gaming and the opening of The Parisian.

Singapore, Las Vegas Strip Revenues May Also Increase

The Las Vegas casino industry grew by nearly 5% between May and June, and while Las Vegas Strip gaming and hotel operations contribute less than 10% of LVS’s overall revenues, the steady growth in the region should offset some minor declines in other operating areas. This quarter, we expect to see steady growth in LVS’s Las Vegas Strip and Pennsylvania operations revenues and profits.

In Q1’17, LVS’s Singapore operations revenues and EBITDA grew by about 16% and 33%, respectively, which surprised many. Marina Bay Sands revenues and profits had declined in 2016 due to weakness in the Asian gambling industry. It is still too early to tell definitively if the Singapore market has started a sustained rebound, but we do expect Singapore to see more VIP gamblers in Q2’17.

For our model and valuation, please refer to our complete analysis of Las Vegas Sands

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