Las Vegas Sands Initiated at Neutral - Analyst Blog
03 Outubro 2011 - 7:19AM
Zacks
We are initiating coverage on Las Vegas Sands
Corp. (LVS), the leading international developer of
multi-use integrated resorts primarily in the United States, Macau,
and Singapore, with a Neutral recommendation.
The Nevada-based company reported second quarter 2011 earnings
above the Zacks Consensus Estimate, driven by company’s strong
business in Macau, outstanding performance of its new resort in
Singapore and improved Las Vegas business. Adjusted earnings of the
company came in at 54 cents per share, above the Zacks Consensus
Estimate of 44 cents. Quarterly revenues surged 47.1% year over
year to $2.35 billion.
Macau is becoming the largest gaming market in the world.
The company primarily derives its revenues from its Sands China
property portfolio in Macau. Macau, the only Chinese city where
gambling is legal, has handled the economic downturn relatively
well. The gaming volume in Macau continues to remain healthy due to
strong tourism. GAAP total net revenue was up 16.3% in the second
quarter of 2011.
Adjusted property EBITDA margin also expanded to a market
leading level of 33% due to higher margin mass table and slot
businesses as well as significant contribution from the important
non-gaming (hotel, retail and convention) components. We also
expect the company to benefit from a management churn at its Macau
operations.
In the near term, Las Vegas possesses the Sands Cotai Central
resort project in the pipeline. The resort will open in two phases
and we are positive about the project as it is coming up in Cotai,
which has great growth potential, and the upcoming project will
represent the next phase in the company’s Macau strategy.
Las Vegas Sands also continues to benefit from its positioning
in Singapore, the fastest growing gaming market in the world. We
believe that the opening of a property, Marina Bay Sands, in
Singapore appears to be the best future growth opportunity for the
company. We expect visitation to be up significantly in the coming
quarters, with the property fully developed including high quality
non-gaming amenities and convention business beginning to ramp.
Moreover, Singapore is poised to grow as the areas surrounding
Singapore have good long-term growth prospects. Additionally, with
the strength in Asian markets, we expect the property to continue
generating outstanding returns for the company. Net revenue in the
second quarter was $737.6 million and adjusted property EBITDA
margin was 55.0%, reflecting strong gaming volume growth in each
segment.
Moreover, its Las Vegas business, which worst affected during
the slowdown, is also steadily improving. However, the upside might
be impacted given the excess capacity in the market. Additionally,
we remain cautious on the stock due to stiff competition from
Wynn Resorts Limited (WYNN) and MGM
Resorts International (MGM) and heavy
reliance on debt financing and capital market for development.
Furthermore, the growth and profitability of the company might
also be adversely impacted by reductions in discretionary consumer
spending due to challenging economic conditions, resulting from a
high unemployment rate and a tight credit market.
LAS VEGAS SANDS (LVS): Free Stock Analysis Report
MGM RESORTS INT (MGM): Free Stock Analysis Report
WYNN RESRTS LTD (WYNN): Free Stock Analysis Report
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