Las Vegas Sands Corp. (LVS), the casino company controlled by Sheldon Adelson, announced recently that its Las Vegas business is picking up especially during weekends as the economy is improving. Las Vegas Sands anticipates achieving 80% of its normal business by next year.
In all the quarters of 2009, Las Vegas Sands experienced a year-over-year decline in its Las Vegas revenue as businesses continued to be negatively impacted by the slowdown in global economies, contracting credit markets and reduced consumer spending.
However with some early signs of economic recovery, the company is experiencing an increase in demand and thus in the first quarter of fiscal 2010, Las Vegas Sands reported an increase of 3% in its Las Vegas business which includes the Palazzo and Venetian resorts.
The positive revenue was driven by a strong gaming business as the table games drop spiked 23.1% year-over-year and the table games win percentage leaped 23.4% year-over-year as well as healthy hotel occupancy which was 89.3%.
Though occupancy levels have somewhat improved, we noticed that pricing pressures persist as Las Vegas Sands continues to offer discounted rates to draw in travelers. As such, we expect profits to remain restricted in this environment.
Las Vegas Sands also owns properties in Macau which include Sands Macau, Venetian Macau and Four Seasons Macau. In the first quarter, the company reported net revenues of $1.33 billion, up 23.7% year-over-year which was mainly driven by its Macau business.
Moreover, the company is on track to build its Cotai Strip project in Macau which is expected to open in 2012. We believe it will give Las Vegas Sands more access to the important MICE (meetings, incentives, convention, events) group business.
In April 2010, Las Vegas Sands opened a $5.7 billion casino resort in Singapore. This property was opened mainly to increase tourism in Singapore and augment the country’s reputation as an international business and leisure destination. Management remains upbeat about its Singapore casino resort and expects to generate strong earnings before taxes as it ramps up operations. Las Vegas Sands believes that with the Singapore opening it can also tap the Middle East and other markets.
With the current economic environment and access to capital improving, Las Vegas Sands views the Asian market important for its growth opportunities and thus plans to enter Japan.
Las Vegas Sands’ primary competitors in the resort and casino market include Boyd Gaming Corp. (BYD) and MGM Mirage (MGM).
We maintain a Zacks Rank #3 on the stock, which translates into a short-term Neutral recommendation. Our long-term recommendation for the stock also remains at Neutral.
Las Vegas Sands is the leading global developer of destination properties (integrated resorts) that feature premium accommodations, world-class gaming and entertainment, convention and exhibition facilities, celebrity chef restaurants, and many other amenities.
Read the full analyst report on “LVS”
Read the full analyst report on “BYD”
Read the full analyst report on “MGM”
Zacks Investment Research
