How Will Las Vegas Sands Perform In Second Half Of 2018?

by Trefis Team
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LVS
Las Vegas Sands
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Las Vegas Sands (NASDAQ: LVS) announced its Q2 earnings on July 25, reporting solid growth in its earnings and revenue, yet the stock fell by about 4% as earnings missed estimates. Revenues in the quarter came in just over 6% higher than the year ago period, while adjusted earnings per share came in at 73 cents (+ 4% year-on-year). Much of the revenue growth came from Macau, largely driven by robust growth in both mass market and VIP games. Macau revenue was up nearly 18% year-on-year to $2.1 billion, forming nearly 64% of the company’s net revenues. However, Singapore revenue fell by about 8% year-on-year to $705 million, as a result of a significant fall in VIP visitations, despite robust growth in mass market. We believe the company is likely to benefit from suite additions at the Parisian Macau, St Regis and Four Seasons properties, and the renovation of VIP gaming areas at the Venetian and Plaza Macau. This should drive the company’s full year results. Below, we provide a brief overview of the company’s results and what lies ahead.

We have created an interactive dashboard analysis which outlines our expectations for Las Vegas Sands over 2018. You can modify the key drivers to arrive at your own price estimate for the company.

Factors That May Have An Impact In The Upcoming Quarters
Macau continued its exceptional performance into Q2, as margins improved as a result of robust revenue growth due to the casino industry rebound in the region. The gross gaming revenues (GGR) in Macau were slightly impacted by the FIFA World Cup, resulting in fewer visitations. However, the GGR grew by nearly 17% y-o-y this quarter, indicating a strong first half. A notable trend in Q2 was robust mass market growth. The Cotai strip has been witnessing strong traffic and higher occupancy rates, driven by the most recent addition of The Parisian Macau. LVS expects further improvement in Macau, as a result of strong traffic and higher occupancy rates. In addition, the company expects its diversified offerings in the Cotai strip and various new infrastructure developments in Macau to continue to provide solid growth. We expect Macau to be the driving force for LVS in 2018, since the gross gaming revenues (GGR) in the region grew consistently for the 23rd straight month in June 2018. In addition, the various new infrastructure developments in Macau should boost the mass market business for the company. Further, the company expects its diversified offerings in the Cotai strip to continue to provide solid growth. Given the improved outlook of the casino market in Macau, we expect another strong year for LVS in Macau driven by rising outbound travel, strong spending growth, and its strong presence in the region.
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