• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Uncertainty to how much will flow through pre-opening expense makes this a difficult quarter to predict and potentially, to analyze.

Q2 is even more of a wildcard than usual for LVS.  Singapore is always difficult to predict given the lack of public data made available from other jurisdictions.  We’re usually pretty close in Macau (thanks Anna) but the discretion involved in determining pre-opening expense means we could be way off on Sands Cotai Central which opened during the quarter.  Sentiment is lousy but we’re generally below the Street so what to do?  Too much risk either way so we’ll defer until we are wearing our post conference call analysis hats.

Here are our projections:

MACAU


Our estimate for Macau property-level EBITDA and net revenues is 10% and 5%, below the street at $443MM and $1.49BN, respectively.  More specifically, we’re below the Street on Sands, Venetian and Four Seasons, but above the Street on Sands Cotai Central’s performance –partly because we think that a lot will get tossed in the pre-opening bucket.  Sands and Venetian played unlucky this quarter, FS held a bit above their historical hold, and Sands Cotai Central held high on their baccarat play.  We estimate that EBITDA would have been $8MM lower if Sands held at its historical rate across its properties.

Venetian

Venetian is projected to report net revenue of $686MM and EBITDA of $249MM, 6% below consensus on both metrics.

  • Net gaming revenue of $587MM
    • $290MM of net VIP revenue    
      • RC volume of $11.1BN, down 17% YoY and 20% QoQ
        • Junket RC volume fell 20% QoQ to $8BN, no doubt as a result of some of the junkets moving over to SCC.  We assume that direct play also took a sequential hit, falling to $3.1BN from $3.8BN the last 2 quarters for similar reasons.  This implies a direct play rate of 28%.
        • Hold rate of 2.61%, which is 30bps below the properties historical hold rate.  We estimate that low hold negatively impacted net revenues by $21MM and EBITDA by $13MM.
      • Rebate rate of 85bps of 33% of hold
    • Mass table revenue of $324MM, up 24% YoY
    • Slot win of $68MM
  • $98MM of net non-gaming revenue
    • $55MM of room revenue ($245 ADR/88% Occ/$215 RevPAR)
    • $18MMof F&B revenue
    • $54MM of retail, entertainment and other revenue
    • $29MM of promotional expenses
  • Variable expenses of $318MM
    • $266MM of taxes
    • $35MM of junket expenses assuming a commission rate of 1.17% (rebate + promoter expense )
    • $24MM of recorded non-gaming expense
  • $95MM of fixed costs, up 3% YoY but down from an estimated $99MM last quarter

Sands


We expect Sands to report net revenue of $284MM and EBITDA of $73MM, 7% and 16% below the Street, respectively.

  • Net gaming revenue of $277MM
    • $161MM of net VIP revenue    
      • RC volume of $11.1BN, down 17% YoY and 20% QoQ
      • RC volume of $6.3BN (down 19% YoY) assuming 11% direct play and a hold rate of 2.56%
      • Rebate rate of 84bps or 33% of hold
      • Assuming historical hold of 2.94%, net revenues and EBITDA would have been $15MM and $9MM lower, respectively
    • Mass table revenue of $141MM, down 1% YoY
    • Slot win of $28MM
  • $7MM of net non-gaming revenue
  • $159MM of variable expenses
    • $129MM of taxes
    • $22MM of junket expenses assuming a commission rate of 1.19% (rebate + promoter expense ) or 33%
    • $4MM of recorded non-gaming expense
  • $49MM of fixed costs, up 7% YoY and flat QoQ

Four Seasons

We estimate $258MM of net revenue and $67MM of EBITDA, 11% below the Street on both metrics.    

  • Net gaming revenue of $235MM
    • $275MM of net VIP revenue    
      • RC volume of $9.5BN, up 188% YoY but down 25% QoQ
        • Junket RC volume fell 28% QoQ to $7.7BN, no doubt as a result of some of the junkets moving over to SCC. We assume that direct play took a small sequential hit, falling to $1.7BN from $2BN the last 2 quarters for similar reasons.  This implies a direct play rate of 18%.
      • Rebate rate of 96bps or 33% of hold
      • The historical hold rate at FS has been 2.75%.  Using historical hold rate, we estimate that net revenue and EBITDA would be $9MM and $7MM lower, respectively.
    • Mass table revenue of $40MM, up 9% YoY
    • Slot win of $11MM
  • $22MM of net non-gaming revenue
    • $9MM of room revenue
    • $7MM of F&B
    • $17MM of retail, entertainment and other
    • Promotional expenses of $11MM
  • $210MM of variable expenses
    • $166MM of taxes
    • $35MM of junket expenses assuming a commission rate of 1.22% (rebate + promoter expense )
    • $6MM of recorded non-gaming expense
  • $22MM of fixed costs, up 20% YoY and down $9MM QoQ

Sands Cotai Central

We estimate $266MM of net revenue and $54MM of EBITDA, 9% and 23% ahead of the Street, respectively.    

  • Net gaming revenue of $251MM
    • $214MM of net VIP revenue    
      • RC volume of $7BN
        • Junket RC volume of $6BN. We assume direct play of 15%, which gets us to hold rate of 3.04%. If direct play was 10%, that would imply a hold rate of 3.22%. No direct play, which we view as unlikely, implies a hold rate of 3.58%.
      • Rebate rate of 96bps
      • Assuming theoretical hold of 2.85%, net revenue and EBITDA would be $9MM and $7MM lower, respectively.
    • Mass table revenue of $85MM
    • Slot win of $19MM
  • $15MM of net non-gaming revenue
    • $16MM of room revenue
    • $5MM of F&B
    • $5MM of retail, entertainment and other
    • Promotional expenses of $11MM
  • $145MM of variable expenses
    • $124MM of taxes
    • $16MM of junket expenses assuming a commission rate of 1.18% (rebate + promoter expense )
    • $7MM of recorded non-gaming expense
  • $60MM of fixed costs

SINGAPORE

We project $777MM of net revenue and EBITDA of $407MM, 2% and 3% below consensus, respectively.

  • Net gaming revenue of $626MM
    • $205MM of net VIP revenue    
      • RC volume of $12.8BN, up 5% YoY
      • Hold rate of 2.85%
      • Rebate rate of 1.25%
    • Mass table revenue of $270MM
      • Drop of $1.2BN, up 7.5% YoY and 22.5% hold
    • $151MM of slot & EGT win
  • $151MM of net non-gaming revenue
    • $77MM of room revenue ($340 ADR/98% Occ/$333 RevPAR)
  • $77MM of gaming taxes and $41MM of GST
  • $245MM of fixed costs, compared to an estimated $243MM in 1Q           

LAS VEGAS

We estimate that Venetian and Palazzo’s net revenues will be $339MM with EBITDA of $88MM, which are 1% and 7% below Street estimates, respectively.

  • Net casino revenue of $100MM
    • Table revenue of $80MM
      • Drop of $443MM, up 5% YoY
        • 18% hold
    • $40MM of slot win
      • $453MM of slot handle, up 10% YoY and 8.8% hold
      • Last year was a very easy comp for LVS with slot handle down 39% YoY as they cut comps too deep
    • Rebates of $20MM or 4.5% of GGR
  • $116.5MM of room revenue - $183 RevPAR (+3% YoY)
  • $138MM of F&B, retail & other revenue
  • $15MM of promotional allowances or 12.5% of GGR
  • 5% YoY increase in operating expenses to $243MM, but down from $256MM last Q

BETHLEHEM  

We expect Sands Bethlehem to report $117MM of revenue and $29MM of EBITDA, 7% and 10% above consensus estimates, respectively.

  • $107MM of gaming revenues
    • Table revenue of $34MM
    • $73MM of slot win
  • $10MM of net non-gaming revenue
  • $46MM of taxes
  • $42MM of operating expenses

OTHER

  • D&A: $224MM
  • Rental expense: $11MM
  • Corp and stock comp expense: $57MM
  • Net interest expense: $63MM