Macau Growth Bolsters LVS’ Top-Line

by Trefis Team
Las Vegas Sands
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Las Vegas Sands (NYSE:LVS) reported impressive Q1 numbers driven by strong revenue growth and margin expansion in the Macau region. Adjusted property EBITDA margin expanded across the Sands China property portfolio to reach a market-leading 33.4%. Overall firm revenues increased from $1.3 billion in Q1 2010 to $2.1 billion in Q1 2011, representing an increase of approximately 60%. Through its operations in the U.S., Macau, and Singapore, LVS competes with other prominent gaming names like Wynn Resorts (NASDAQ:WYNN), MGM Resorts International (NYSE:MGM), SJM (HKG:0880), Galaxy (HKG:0027) and Harrah’s among others.

Our price estimate for LVS stands at $49.36, implying a roughly 15% premium to market price.

Macau Operations

LVS’ operations in Macau began in 2004. Its Sands Macao facility was the first Las Vegas-style casino to open in Macau. The company currently operates several facilities in Macau, including the Venetian Macao, the Sands Macao and the Plaza Casino at the Four Seasons Hotel. During Q1 2011, LVS generated strong gaming volumes across its properties, and saw impressive margin growth in mass market table games and slot machines.

Another property is currently under construction on the Cotai Strip in Macau. This 13.7 million square foot development should further strengthen LVS’ position in Macau’s rapidly expanding gaming industry.

Las Vegas Operations

The company’s Las Vegas properties feature 7,100 suites and approximately 225,000 square feet of gaming space, which includes approximately 240 table games and 3,020 slot machines. In 2009, LVS expanded its presence in the U.S. with the opening of its Sands Bethlehem resort in Pennsylvania.

Table games and slot machine gaming volume witnessed a contraction in the recent quarter, which was expected given decreased promotional activity. Casino revenues declined to $83.1 million from $155.3 million in Q1 2010. Low hold on table games play also impacted LVS’s quarterly performance.

See our full analysis and $49.36 price estimate for Las Vegas Sands stock

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