LVS 3Q REPORT

Takeaway: We believe the quarter is not the story. Singapore should stabilize and Macau growth is accelerating, as is market share for LVS.

In an effort to evaluate performance and as a follow up to our YouTube, we compare how the quarter measured up to previous management commentary and guidance

OVERALL

  • SAME:  Singapore missed expectations even on a hold adjusted basis.  However, Macau was better and the dividend was raised.  We believe the quarter is not the story.  Singapore should stabilize and Macau growth is accelerating, as is market share for LVS.

DIVIDEND

  • BETTER:  LVS raised its quarterly dividend by 40% to $0.35 per common share, or $1.40 per common share per year, beginning in 1Q 2013.  
  • PREVIOUSLY:  "I'd like to see some more dividends"

MARGIN GROWTH

  • WORSE:  Sands Cotai Central EBITDA margins fell from 19.5% to 18.1%.  Lower than expected VIP hold (2.28%) and mass hold (20.7%) impacted results. 
  • PREVIOUSLY:  "We think that we've got some opportunities to grow margins obviously with the initial margin at the Sands Cotai Central being a little bit below what our historical margins are at the Venetian as a result of the mix of business being more heavily weighted toward VIP. We think as the mass market grows, both at Sands Cotai Central and really across the portfolio of properties in Macao, with the mass margins being significantly higher than the VIP margins, that we would anticipate margin expansion on a consolidated basis."

SCC HOTELS

  • BETTER:  Hotel occupancy reached 88.9% during the quarter with ADR of $149. 
  • PREVIOUSLY:  "The hotels are enjoying strong occupancy, including 61% in April, 74% in May, 85% for the month of June, and the ramp continues into July."

WALK-OVER BRIDGE

  • SAME:  The connecting bridge is expected to be completed in December.
  • PREVIOUSLY:  "The air conditioned walk-over bridge connecting the Venetian and Four Seasons to Cotai Central opens in January of 2013."

 PREMIUM MASS SCC

  • SAME:  Mass drop per day increased to $6 million from $5 million in 2Q.
  • PREVIOUSLY:  "We believe that that segment will continue to grow and we believe we'll be a player in each of the three sub segments because of the amount of tables we have to offer, the rooms, the retail, especially Sands Cotai Central is built for that." 

SINGAPORE RECEIVABLES

  • WORSE:  A $15 million increase in the provision for accounts receivable adversely impact property EBITDA by ~$15 million.
  • PREVIOUSLY:  "We've continued to collect from the junkets as we have in the past and really see no deterioration from that perspective. Our reserves are growing a little bit just from a prudency standpoint. Against that total amount of receivables, we've got about a 15% reserve that's outstanding."

LV GROUP BUSINESS

  • SAME:  LVS had some group cancellations in 3Q but 2013 group bookings are improving.
  • PREVIOUSLY: "Group rooms business and pricing is picking up for 2013. We are investing for the future in Las Vegas, renovating 1,000 rooms in our Venezia tower, remodeling and redesigning the gaming floor at the Venetian, and introducing a whole new entertainment offering in the fall."3