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In preparation for the LVS Q2 earnings release tomorrow, we’ve put together the pertinent forward looking commentary from LVS’s Q1 earnings call and subsequent conferences/releases.

Sands China Ltd. Announces US$3.5 Billion Refinancing (June 15, 2011)

  • Terms:
    • US $3.0BN Term Loan A, matures 2016; L+2%
    • An undrawn US$500 million Revolver, matures 2016; L+2%
  • Proceeds used to retire the outstanding balances and commitments on Sands China's existing US$2.7 billion Venetian Macau Credit Facility and its US$1.75 billion Venetian Orient Limited Credit Facility as well as fund the completion of construction of the first two phases of Parcels 5&6 on the Cotai Strip in Macau
  • Will have the option to raise an incremental US$1.0 billion of new senior secured credit facilities under existing baskets within the new credit facilities.

Post Earnings Commentary (Sanford C. Bernstein & Co Strategic Decisions Conference)


  • [Galaxy Macau impact] “So far the Venetian has not felt any change in their business. If anything our business has been very, very good in May so we haven’t felt anything there. We felt a little tiny bit of leakage in the Sands on the peninsula, which I think was normal. People coming over to see it; Galaxy has been pretty aggressive in terms of how they sign ups are going for mass market play. So we have to do some work at the Sands in that area, but anything that comes to Cotai now, in the short term is probably going to pull business from the peninsula. In the long term, we think Galaxy will add to the Cotai as being the number one destination.”
  • [Sites 5 & 6] “There’s actually two casinos, one with site five for those two hotels, and one between the two Sheraton Towers on site six so we’ll have a full casino complement. Most of consensus is saying they’re counting about somewhere around 300 million of EBITDA out of that situation for 2012. So that’s a pretty easy target for us to make, and we think we’ll do that.”
  • [Site 6 opening date] “The first tower of Sheraton, if we get the first tower and the casino and the food and beverage complement, we can open that facility without the second tower, which is way at the end so it wouldn’t bother that first tower. So that could be at the end of ‘12.”
  • [Inflation target] “We still have some difficulties in imported labor, but those are going to be loosening, I believe, for the  loosening for Galaxy and us in five and six and others because there just isn’t enough people. So that might help to keep some of the inflation down, but I think consistently it would be in that 5% to 6% area.”
  • [Cotai capex] “To complete Cotai, well, we have about $1.5 billion of debt left to spend to finish five and six. And then after that, there will be some, a little bit of after burn but we don’t – we predict very low capital expenditure from a new product standpoint in ‘12. We have operating capital that we’ll do for rehab for Las Vegas and others. That’s probably in the $150 million to $200 million a year which is pretty easy for us to do.”
  • [Legal issues] “It could take six months to a year to do and we certainly won’t finish it in ‘11; maybe some time and hopefully by next year this time we’ll be coming to conclusion.”



  • [Singapore/non-Singapore mix] “So you’re going to see that 70/30 ratio go 75/25, I think, by the end of ’11.”
  • [Margins] “Well, margins in Singapore should be north of 50%, but the margin in Singapore, most people, if they really take our numbers and take them apart would find that when you have a higher hold and 2.85% on your rolling volume your margin goes up; when you have a lower hold than 2.85%, your margin goes down. For example, last night in Singapore, we held at 4.85%, our margin was – on the total building and whatever it was in the 70s, so that will vary. If you hold higher, your margins go up. So if you hold 2.85%, our margin should be in the low-to-mid – low 52%, 53%, 54%.”
  • [Rebate] “That commission that comes back to a player varies with the amount that’s played, so it can range from 1.1% to 1.4% or sometimes 1.5%. We believe that Sentosa – we don’t know for fact, but we do believe that they are slightly higher in their commission in that range. And we have – but it also depends upon how much each player plays. So generally, we’re programmed to run about 1.2% to 1.3%. We’ve have the same commission structure from the very beginning and the trend has been the same.”
  • [Win per day] “When we opened, we were doing $2 million a day of win. We’re now running around $4 million or $4 million plus of win, and that’s still growing as we manage the floor better, which is really a science and an art combined. And we think that has upside potential. In the VIP, our roll continues to improve, continues to go up. We have 110 people in the field now finding customers at the high-end level. That’s $10,000 to $1 million of play per hand, going up with large credit customers. And we’re not having trouble with our collections and that continues to grow.”
  • [MICE/slots] “The bookings have been good. They’re getting better. The demand for the property is going up. Our room capacity is running in the high 80s at close to US$300 which is one of the highest rates in Singapore. And a lot of that is MICE business and group business coming in as well. So we’re running out of space in MICE. We’re running out of rooms. We’re running out of slot capability, because we’re only allowed 2,500 slots. I mean, they’re great problems to have, but there are some locations around our building that we’d like to talk to the government about us taking and doing some expansions. But it’s a little early yet so right now, things are growing in every area.”
  • [F&B, retail] “Our retail business, our mall is supposed to be 300 stores. We expect that to be a 200 million EBITDA business. It’s running in the low 100s now after one year and many stores were not open. We think we can make that target sometime in ‘12; by the end of ‘12, after the subway connects. Theaters are now open. We’re doing business there. And our food and beverage has been quite successful.”
  • [Capex] “This year we planned a couple of hundred million. I think by 2012 we have no more capital, other than the capital we’re doing on Tower 3, which would be capital coming out of the building; there’s no extra capital.”
  • [VIP share] “We are capturing a lesser share of the VIP market because – I don’t want to get into details about junket reps or anything, but they seem to like to pay higher commissions than what we want to pay."


  • [Group rates] $180 in ‘11 for the group rate and it’s close to $200 in ‘12 so far. We dropped a lot of money in the first quarter. We’ve done better lately in Las Vegas. Our group business is solid, our weekend business is solid. It’s back in terms of volume, but it’s not back in terms of money. Room rates still are behind 2007 and that’s going to be awhile ‘til that recovers in both group and transient market.”
  • [LV as % of EBITDA] “The future in Vegas, Vegas and Bethlehem, which is our U. S. business, is about 12% of our profitability as a company, 88% being in Asia. That’ll probably go to 90/10 next year.”
  • [Group %] “Our group percentage is going to be in the high 30s this year, 30% of our business. We’d like to get it at 40% because almost all of that is mid-week business where Vegas has widened demand. The weekends in Vegas have been strong this year. It’s just that the rate, the average room rate, and the average daily spend per guest is not what it used to be.”
  • [Aria impact] “Aria in City Center impacted us more because the rate flexibility in that product and some of their group business that they could take even if they have the smaller facilities affected our group rate.”



  • [Taiwan MICE] “Taiwan is just getting into the gaming situation, but we don’t want to be on an island. We prefer to be in Taipei because we want to do MICE business and we think that’s really important to our concept.”
  • [Spain] “Sheldon’s vision for the strip, so to speak, he calls the strip, in Spain which is a European, which is located in Spain, would be approximately 12 properties built in three phases. One phase with four properties in all of the support facilities; and then after that is built, that the cash flow from that would generate the next four and then the next four after that. The land surrounding the strip would be developed by developers in partnership with us if we want to. That’s the way we’ve structured that deal. So we’re looking for a rather large site.”


Youtube from Q1 Conference Call


  • [EBITDA target] “The expectation is that we’ll hit $3 billion plus in EBITDA this year. And some people are saying that we might hit $4 billion. I can’t make any comment about 2012. I won’t make any comment about that, but I will say that we feel quite confident that the $3 billion mark will be breached.”


  • [Bookings] “Based on our existing bookings, we expect to do more than 700,000 group room nights in 2011, with an expectation of 1 million total group nights in 2012.”
  • “Our cumulative hold percentage in Las Vegas on Asian Baccarat play exceeds 27%.”


  • [Margins]I don’t think we’ll see change in April or May or beyond. If anything, I see increasing margins in mass table and slot as we grow there. I don’t see the margin getting a whole lot better on the Roll as well. It’ll still be in the low 30% because you’re still paying out. Most of the business is on the very high end and you’re be paying as high as 1:4. So I don’t see how we get that much beyond 32%, 33%. But I do see a little bit of appreciation as we grow on the slot, table mass side.”
  • [# of junkets] “I think junkets, there’s now 31 companies in the queue as we speak. I think that will grow to 40, 50 by the time the summer rolls around.”
  • [Slot rev guidance] “If you look at the slots, we’ve gone from the first full quarter which is Q3 ’10, we’ve approximately won about $79.5 million then jumped to $96 million there and then jumped to $108 million. Can we get to $120 something million next quarter? I believe we can. We believe the market can grow you know easily we can see 1.8, 1.9 next year as a cumulative mass slot.”


  • [Sites 5&6 opening date] Although we have made significant progress on parcels 5 and 6, our anticipated opening of Phase I could slip to the first quarter of 2012 if we do not secure increases in our present construction labor force.”
  • [Junket/Direct %] “Our Roll will continue to be probably spread 80/20, 85/15 junket versus direct. We’ve said it before and we’ll say again, there’s a market for the direct VIP, but the primary market in the Macau has been and continues to be on the junket business because of the obvious reasons that we’ve talked about in the past. And… it won’t diminish.”
  • [Sites 5&6 workers] “We have roughly about 5,500 on the site now. We’re running about five weeks behind on the December target. We met there last week. We need to pick up another 1,000 to 1,500 employees in some of the specialty areas like mechanical, electrical, plumbing, et cetera, which is where the problems are. And we’re still hopeful we can make that target. But the reason we’re talking about possible slipping is if we don’t get that extra 1,500 or so, we will have difficulty meeting the target. And we’re gradually increasing. Last week we got 400 to 500 more and we’re hoping as Galaxy opens we’d get some more, particularly in that area from MEP.”
  • [Galaxy impact]  "As to the promotional issues, I think the Galaxy people are going to be focused on making money and watching the margins, and I don’t think it’s going to be an issue."


  •  [Spain/North Africa]  “We just had a team of people over to Spain. We are continuing to lay the groundwork for that. We have constant meetings about planning and programming; that is, how much space we’re going to allocate to which of the properties. We’ve talked to builders. We’re in discussions with both the governments and land acquisition, both in Madrid and Barcelona. And it’s not a Spanish development per se. This will be a development where the primary market is all of Europe: Western Europe, the former Warsaw Pact countries, Western former Soviet Union countries, even into Moscow and St. Petersburg, down to the Middle East, Turkey, with 85 million people, and North Africa. Nobody’s talked about North Africa. There’s a lot of haves there and there are far more have-nots. So we’re hope that North Africa will help to fatten up the market there. But it’s for 700 million, 800 million people in the catchment area, so it’s not just Spain. And we’re moving forward on that. We’re not ready to break ground. We don’t have the grants and incentives finalized yet, but we’re in heavy discussion."
  • [Massachusetts/Rhode Island] “If Massachusetts allows three full casinos, Rhode Island is considering converting their two slot parlors into full fledged casinos. The two, the Mashantucket Pequot and Mohegan Sun in Connecticut, are still there. It all depends where they allow them. I think with three, there might be too small of a market up there so it may not justify the kind of money that we’ll have to spend to show our best, to flex our muscles the best.”