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Big benefit from high hold, particularly at MBS, drives a small beat over consensus.  Despite higher whisper numbers, 2011 estimates continue to look reasonable. We will have a detailed analysis later but here are our conf call notes.


"We are pleased to report record financial results for the fourth quarter of 2010. We set quarterly records for net revenue, adjusted property EBITDA, and adjusted property EBITDA margin during the quarter. Strong revenue growth and margin expansion in Macau, together with outstanding results at Marina Bay Sands in Singapore and improving results in Las Vegas and Bethlehem, contributed to an industry-leading financial performance."

- Sheldon G. Adelson, chairman and CEO

CONF CALL NOTES

  • Confident that their EBITDA growth will continue into 2011 - as validated by their January results
  • 806MM shares is their fully diluted share count in the quarter
  • Singapore - 1Q2011 - most of the remaining elements of the property will be launched: Lion King, Museum, and Water Show on the Bay
    • Mice business continues to grow
    • Visitor arrivals to Singapore have increased over 20%
    • LVS now owns the 2 top MICE hotels in Asia
    • The Singapore market is still growing, and the subway stop at their property opening in 2012 will help them
    • They are in the process of adding 300 more slot units
    • Think that CNY will be a big growth catalyst for them
  • Macau
    • EBITDA should be the true metric on which performance is judged, not GGR. Their market share of EBITDA was more than 2x that of SJM.
    • "Remember you can't put GGR in the bank"
  • Sands Bethlehem: 300 room hotel will open in May
  • Development pipeline:
    • Visited with government and tourism officials all over the world at their request to discuss the development of a MBS-like resort
    • Talking to Korea, Taiwan and Japan
    • Also to Florida and Texas

Q&A

  • Margin pressure in Macau due to wage pressures and competitive pressures?
    • Wage pressures are under control for now
  • Lot 3- will they get an extension?
    • Feel confident that they will get an extension if they want it. But they can monetize.
  • Still waiting to hear from the government on the FS condos.  Feels very confident that they will get something approved in the quarter.  Just received some pages commenting on issues at FS condos
  • FS Plaza had a hold issue - only 1.55%.  That was reversed over the last few weeks. They have made more than $20MM of EBITDA in just Jan 2011. The limited # of junket reps there make it more volatile - they are looking to bring in more junkets to make it less so.
  • Seasonality in MBS - saw some softness in November and saw strength during Christmas and New Year's.  CNY should be great ... they are still learning.
  • EBITDA is over $110MM in January at MBS. Wouldn't let one month's drop in RC determine what the future of Singapore will be.
  • In Vegas, experienced over 90,000 room nights during January and lowered their comps considerably to get a better customer in. Rates are somewhat under pressure but are seeing some improvement in January.  There is a lot more competition now at the high end.  Have high expectations on their Intercontinental alliance.  They have cut out almost all of their comps except to their best customers - which is resulting in a substantial increase in cash income
  •  Labor expectation for Sites 5 & 6.  Expect to get 3,000 workers from Galaxy's site at the end of February. Still plan on opening a portion of Ph1 - 1000 rooms, one of the mass casinos and a VIP casino. Have 3,500 employees now.
    • May 2012 is the scheduled completion of PH1 of Sites 5 & 6. What happens afterwards depends on the labor situation.
  • Singapore ramp of non-gaming amenities - running in the mid-to- high 80's for occupancy - close to their 90% target. Their MICE business in the first quarter of 11' is good.  The rate is good. Think that they are at 80-85% of their potential in their life cycle for non-gaming revenues.  Have about 40 more retail stores to open. Probably 55-60% of the way there for retail EBITDA - which will get a nice boost when the subway opens.  Sales are $982/psft now. Mid 80's EBITDA run rate on the Mall - think that eventually they can do $170MM of EBITDA there in a few years
  • Concentrating on improving the junket business.  Think that there is huge upside there for them.  
  • 16-24% is the range of their direct business at their properties in Macau. At Venetian its 18.6%. 
  • They are in the process of looking for a CEO of MBS and they will take their time. Looking for a broad based business person.
  • Any commentary of 2012 business in Vegas?
    • Have 781,000 rooms nights - and the forecasted ADR is closer to $200 vs. this year's $180
  • Singapore - slot win per unit per day is great- what is their capacity to add more aside from the 300 they are adding?
    • Not sure - the market is very deep for Mass and Slot drop/ handle - thinks $1-1.5BN
    • Will add 300 games by end of Q1
  • Mark Juliano is moving over to the casino side in Singapore this weekend. Also hired a SVP marketing executive formerly from Starwood.
  • Dividends?
    • Haven't really spoken about it
    • But are talking about paying down $2BN of debt in Macau
    • Aren't paying down debt in Singapore yet
  • Has no reason to think that they won't earn $3BN of EBITDA this year including a $1BN in Singapore
  • CNY should be huge all across their regions this year
  • Demand in Las Vegas for CNY is huge- they are completely sold out
  • They are talking about getting grants and incentives in Europe as well. Will take an approach of bidding out construction going forward.
  • Their 270 moving day average is 2.93% in Singapore... so according to Sheldon you don't need to adjust the hold % for the high hold this quarter
  • In another location where Intercontinental is partnered - they brought in 44% of hotel revenue
  • Relationship with their junket reps is improving - they will have 40 private gaming rooms that are junket operated in the VIP casino at sites 5 & 6