LVS: EXPECTATIONS MAY HAVE CAUGHT UP TO REALITY

It’s been awhile since we haven’t been way above the Street for quarterly earnings.

There are many things to like about the LVS outlook:  strong growth in two very profitable Asian markets, potential recovery in Las Vegas, and the prospect of new Asian markets.  Maybe unfortunate for the stock, investors are well aware of the prospects.  As we wrote about a few weeks ago, for the first time in a long time, consensus estimates do not appear conservative, starting with Q4.

We’re actually slightly below the Street on LVS’s 4Q results.  We estimate that LVS will report $659MM of EBITDA this quarter, which is 2% light of consensus.  While this wouldn’t be a huge miss, we believe that anything short of a nice beat would be disappointing given the momentum behind this name – not to mention the rich valuation.

We’re in-line in for Vegas and a little below consensus on everything else… read below for more details and the math behind our numbers.

Las Vegas

We estimate that Venetian and Palazzo will produce $316MM of net revenues and $78MM of EBITDA

• Net casino revenues of $134MM
  • 6% growth in slot handle and slot win of $54MM
  • 4% growth in table drop, with normal hold of 19%, for total table win of $101MM.  Last year Vegas table hold was only 17% (same as last quarter)
• $226MM of non-gaming revenue (compared to $215MM last quarter) and $44MM of promotional expenses (compared to $41MM last quarter)
• Operating expenses of $238MM (compared to $232MM last quarter) up 15% YoY

Pennsylvania

We estimate that Sands Bethlehem will report $79MM of revenues and $15MM of EBITDA (5% below the Street)

• Slot revenue of $62MM / win % of 7.3%
• Table revenue of $14MM, Oct and Nov revenues totaled $9.7MM
  

Macau

We estimate that Sands will report net revenues of $317MM and EBITDA of $81MM (4% above consensus)

• VIP net win of $154MM
  • Assuming 14% direct play, RC volume of $7.4BN, up 12% YoY
  • Above normal hold of 3.05%
  • Gross win of $226MM and a rebate of 98bps (32% of hold)
• Mass win of $132MM and slot win of $25MM
• $20MM of non-gaming revenue and $14MM of promotional expenses
• $182MM of variable expenses, $4MM of non-gaming expenses and $50MM of fixed expenses
  • 3Q10 fixed expenses were $50MM

We estimate that Venetian will report net revenues of $658MM and EBITDA of $214MM (in-line with consensus)

• VIP net win of $254MM
  • Assuming 23% direct play, RC volume of $12.5BN, up 24% YoY
  • Hold appears normal at 2.9%
  • Gross win of $363MM and a rebate of 87bps (30% of hold)
• Mass win of $270MM and slot win of $54MM
• $111MM of non-gaming revenue and $31MM of promotional expenses
• $182MM of variable expenses, $21MM of non-gaming expenses and $100MM of fixed expenses
  • Implied fixed expenses were $96MM for 3Q10 and $111MM in 4Q09

We estimate that Four Seasons will report net revenues of $105MM and EBITDA of $22MM (43% below consensus)

• VIP net win of $53MM
  • Assuming 44% direct play, RC volume of $3.8BN, up less than 1% YoY
    • Junket RC volumes were actually down 22% YoY
  • Direct business is booming  and the junket business is weaker because they lost share from Jack Lam – which was down $1BN for the year
  • Low table hold of 2.2% didn’t help- although 4Q09 also suffered from low hold of 2.12%
  • Gross win of $363MM and a rebate of 87bps (30% of hold)
• Mass win of $28MM and slot win of $7MM
• $25MM of non-gaming revenue and $8MM of promotional expenses
• $58MM of variable expenses, $5MM of non-gaming expenses and $20MM of fixed expenses
  • Implied fixed expenses were $20MM for 3Q10 and $18MM in 4Q09

Singapore

We estimate that Marina Bay Sands will report net revenues of $558MM and EBITDA of $302MM (5% below consensus)

• VIP net win of $156MM
  • RC volume of $10.8BN, up 5% sequentially
  • Normal table hold of 2.8%
  • Gross win of $301MM and a rebate of 1.35% (in-line with last quarter)
• Mass win of $211MM and slot win of $94MM
• $129MM of non-gaming revenue (compared to $101MM in 3Q10) and $32MM of promotional expenses
• $105MM of variable expenses and $150MM of fixed expenses
  • Implied fixed expenses were $145MM for 3Q10