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It's all about Las Vegas!  Just kidding. 

 

Macau may disappoint the Street but it all comes down to Singapore where expectations are all over the place.  We were initially worried that management had raised the bar too high on Singapore.  You may recall such comments as "Q3 VIP volumes at the end August had already reached Q2 levels".  However, at least one analyst tried to temper expectations yesterday as September hold percentage may have been a bit low.  Management has a lot of flexibility - and uses it - in determining the hold impact.  As usual, we will try and get you an impartial and unbiased estimate of the hold impact.  For now, we are somewhat agnostic on the stock going into Thursday's Q3 release.

Here are our projections:

MACAU

We estimate that LVS’s 3 properties will do $1,143MM of net revenue and $364MM of property level EBITDA in 3Q11.  Luck did not smile upon LVS’s properties this quarter – with all three holding low in the 3rd quarter.  We estimate that low hold cost LVS $30MM in net revenue and $18MM of EBITDA on the VIP side.  We’re pretty sure some of that bad luck was offset by good luck on the Mass side, but we’ll have to wait and see until they report that detail.

We estimate that Sands Macau will report $318MM of net revenue and $87MM of EBITDA, which is 5% below the Street.

  • Net gaming revenue of $309MM
    • VIP Net table win of $136MM, negatively impacted by low hold
      • RC volume of $7.7BN, assuming 12% direct play and 2.6% hold
      • Rebate rate of 84bps or 32% of hold
      • Normalizing for hold, gross win would have been $18MM higher and net win would have been $12MM higher.  EBITDA would have been $7MM better.
    • Mass win of $146MM
      • $728MM of drop and 20% hold
    • Slot win of $27MM
  • Net non-gaming revenue of $9MM
    • Promotional expenses of $11MM or 3.5% of net casino revenues
  • $181MM of variable expenses
    • Taxes: $146MM
    • Junket commission and gaming premiums: $29MM
  • $4MM of non-gaming expenses
  • $46MM of fixed expenses in-line with last quarter

We estimate that Venetian Macau will report $671MM of net revenue and $229MM of EBITDA, which is 6% below the Street.

  • Net gaming revenue of $580MM
    • VIP Net table win of $230MM, negatively impacted by low hold
      • RC volume of $12.2BN, assuming 21% direct play and 2.7% hold
      • Rebate rate of 81bps or 30% of hold
      • Normalizing for hold, gross win would have been $19MM higher and net win would have been $13MM higher. EBITDA would have been $8MM better.
    • Mass win of $292MM
      • $1,120MM of drop and 26% hold
    • Slot win of $58MM
  • Net non-gaming revenue of $91MM
    • Promotional expenses of $24MM or 3.5% of net casino revenues
  • $325MM of variable expenses
    • Taxes: $265MM
    • Junket commission and gaming premiums: $47MM
  • $22MM of non-gaming expenses
  • $95MM of fixed expenses

We estimate that Four Seasons/Plaza will report $154MM of net revenue and $48MM of EBITDA, which is in-line with the Street.

  • Net gaming revenue of $131MM
    • VIP Net table win of $78MM, negatively impacted by low hold
      • RC volume of $4.4BN, assuming 41% direct play and 2.7% hold
        • This would mark the second sequential quarter of YoY declines.  We expect that 4Q will see a turnaround in VIP volumes with Neptune opening up its rooms any week now and then Sun City opening by year end.
    • Rebate rate of 89bps or 33% of hold
    • Normalizing for hold, gross win would have been $7MM higher and net win would have been $5MM higher. EBITDA would have been $3MM better
    • Mass win of $42MM
      • $119MM of drop and 35% hold
    • Slot win of $11MM
  • Net non-gaming revenue of $23MM
    • Promotional expenses of $10MM or 7.5% of net casino revenues
  • $78MM of variable expenses
    • Taxes: $66MM
    • Junket commission and gaming premiums: $9MM
  • $7MM of non-gaming expenses
  • $20MM of fixed expenses

SINGAPORE

We estimate that MBS will produce $785MM of net revenue and $434MM of EBITDA this quarter, which is 10% higher than the Street.  Based on our tax revenue through August, we believe that the Singapore market is on track to do S$2BN of revenue this quarter and MBS has a good shot of capturing more than 50% of the GGR this quarter despite lower sequential hold.

  • Net gaming revenue of $634MM
    • VIP Net table win of $223MM
      • RC volume of $14.7BN, up 43% YoY and 20% sequentially.
      • 2.8% hold – the average hold for MBS since opening has been 2.7%
      • Rebate rate of 1.23%
      • Normalizing for hold, gross win would have been $7MM higher and net win would have been $5MM higher. EBITDA would have been $3MM better.
    • Mass win of $275MM
      • $1.3BN of drop and 22% hold
    • Slot win of $136MM
      • $2.5BN slot handle, 5.4% win rate
  • Net non-gaming revenue of $151MM
    • Promotional expenses of $40MM or 21% of non-gaming revenues
    • $65MM of hotel revenues
  • $143MM of variable expenses
    • Taxes: $135MM
  • $208MM of fixed & non-gaming operating expenses, up a little from $201MM last quarter

LAS VEGAS

We project LVS’s Las Vegas operations will produce $318MM of revenue in 3Q11 and $80MM of EBITDA, which is 4% ahead of the Street.

  • $104MM of net casino revenue
    • Slot win of $36.2MM flat QoQ
      • Handle down 37% YoY to $418MM but up sequentially from $412MM
      • Win %: 8.7%
    • Table win of $83MM
      • -5% YoY table drop ($453MM), 18.3% hold
  • Gross gaming revenue of $119MM and a rebate equal to 3.3% or $14.7MM compared to $15.6MM last quarter
  • $214MM of net non-gaming revenue
    • $106MM of room revenue
      • RevPAR: $164 (up 6% YoY)
        • Occupancy: 88%
        • ADR: $187
  • $126MM of F&B, Retail and other revenue, up 15% YoY
  • Promotional expenses equal to 15% of gross gaming revenue or $18MM
  • Gaming taxes of $8MM and total operating expenses of $230MM, down slightly from $232MM last quarter

PENNSYLVANIA

We estimate that Sands Bethlehem will report 3Q11 net revenue of $110MM and EBITDA of $28MM

  • $70MM of slot revenue, $30MM of table revenue

Other:

  • D&A: $206MM
  • Rental expense: $10MM
  • $50MM of corporate and stock comp expense
  • Net interest expense:  $51MM