Key Takeaways From Las Vegas Sands Q3

by Trefis Team
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Las Vegas Sands
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Las Vegas Sands (NASDAQ: LVS) reported relatively weak Q3 results on October 24, dampened by subpar performance from its Singapore and domestic – Las Vegas and Pennsylvania – properties. The company missed both earnings and revenue consensus estimates. Despite the slowdowns, revenues in the quarter came in just under 7% higher than the year ago period, while adjusted earnings per share came in at 77 cents (+5% 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 13% year-on-year to $2.15 billion, forming nearly 64% of the company’s net revenues. However, Singapore revenue fell by about 3% year-on-year to $766 million, as a result of a significant fall in both VIP and mass market. Further, domestic casino revenue fell by about 3% y-o-y, as a result of lower room occupancy at its Vegas property and below par casino visitations at its Sands Bethlehem casino. We expect the holiday season in Q4 to drive its full year results. Although the ongoing expansions of multiple Macau casinos is likely to dampen its bottom line in the near term, we expect the suite additions at The Parisian Macau, St Regis and Four Seasons properties, the renovation of VIP gaming areas at the Venetian and Plaza Macau and remodeling of The Londoner Macau should hold significant potential in the long term. Below, we provide a brief overview of the company’s results and what lies ahead.

Our price estimate for Las Vegas Sands stands at $85, which is now significantly higher than the market price. We are in the process of updating our model based on the guidance provided. 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 strong performance into Q3, despite the slowdown in gross gaming revenues (GGR) – as a result of hurricanes, a weak VIP market, and slowing Chinese economy sentiment. As a result, the GGR grew by just over 10% y-o-y this quarter, reiterating the impact of typhoons and a slowing Chinese economy – resulting in soft VIP visitations. However, LVS reported strong VIP and mass market growth across most of its Macau properties – except The Parisian Macau. 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 26th straight month in September 2018. Further, we expect the holiday season in Q4 to drive LVS’s full year results. 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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