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A slight beat even with lower hold in Singapore.

"We set quarterly records for both net revenue and adjusted property EBITDA during the quarter. Strong revenue growth and margin expansion at Marina Bay Sands in Singapore and our portfolio of properties in Macau and the United States contributed to excellent financial performance overall." 

CONF CALL NOTES

  • MBS's EBITDA would have been $438MM million and when combined with $6 million of nonrecurring expenses, margins would have been of 54.1%
  • Macau would have produced $401MM on a hold adjusted basis
  • Have an aggressive plan for the Plaza beginning with the addition of two new meeting VIP operators opening in the next couple of weeks
  • Table games drop in Las Vegas has the second-largest quarter in terms in the history of their properties
  • Sands Bethlehem's outlets should open next week and should be a driver of continued growth at that property

Q&A

  • At MBS, they are reserving between 3-7% of RC. This past quarter they reserved at 5.4% ($24MM reserve)
  • Having a very high end customer is driving higher commissions since their players are buying in at greater amounts at MBS
  • If anything, trends in October would suggest an acceleration of the trends seen in 3Q at MBS
  • Vegas has very heavy Asian play this past quarter at their properties - "we have never seen a third quarter or summer quarter have those kinds of drop numbers"
  • Customers from China and HK are driving the massive VIP growth at MBS
  • Non-recurring: Got property assessment from the government - so that was $3.6MM and then there was a $2.4MM entertainment charge
  • They do not think that they will cannibalize any of their properties when Sands Cotai Central opens
  • Rate structures are done in a way to avoid cannibalization
  • Feel like the new rooms at Sands Cotai will help them continue to dominate the mass market
  • Any reason why the hold so far at MBS has been lower than theo? No. They are currently tracking at 2.82% YTD
    •  We estimate October is trending at 3.3% hold MTD
  • Maintenance spend of $400MM in 2012 and $1.2BN of project spend on Sands Cotai Central
  • In Singapore, majority of their Mass customers are from non-rated players - tourists. On the slot side, it's more rated players.
  • Visitation into MBS's casino is flat QoQ but visitation to the property has growth. Think that the train stop will be a very nice driver for retail, non-gaming spend and mass play.
  • They are not really spending that much to grow the VIP business and it should have a great ROI with low capital intensity
  • Capacity constraints at MBS: No constraints on VIP side, run at 80% capacity on the slot side which is pretty constrained on Saturday nights but is rarely a problem otherwise. On the Mass side, they are hiring more dealers to get more tables opened. They are only constrained 5.5 days a week. 
  • They know that they have underperformed in VIP and can't think of a reason why things would get worse from here. They don't see a case where things get a little worse before they get better.
    • The direct play at Venetian spiked to 24% this quarter and increased to 15% at Sands, so we have to agree
  • Think that if either Korea or Japan legalize gaming, the other will legalize in short order
  • His family is in favor of dividends, which they will definitely consider next year
  • Sheldon doesn't think that their are indications that the government intends to tighten money supply
  • Sand's advantage with junkets is that they are the only new supply in town for a while with the opening of Sands Cotai
  • Macau reserves? 
    • Very consistent with what they have done historically.  

HIGHLIGHTS FROM THE RELEASE

  • MBS adjusted property EBITDA: $414MM and a margin of 52.9%
  • Macau adjusted property EBITDA: $388MM and a margin of 33.3%
  • "Opening approximately five months from today in March 2012, the 13.7 million square foot Sands Cotai Central will add substantial scale to the Cotai Strip and will feature amenities and attractions designed to broaden and deepen Macau's appeal as a destination for both business and leisure traveler"
  • Las Vegas: adjusted property EBITDA of $94MM 
    • "Table games drop was up during the quarter, reflecting strong baccarat play. Cash revenues from occupied rooms increased by more than 33.5% compared to the same quarter last year. In addition, 93% of our occupied rooms during the quarter were sold to cash-paying customers, compared to just 72% in the third quarter of 2010. RevPAR increased 8.6% as our FIT, group meeting and convention businesses expanded."
  • Sands China: 
    • Net revenue $1.2BN
    • Adjusted property EBITDA: $391MM
    • NI: $278MM