LVS: EXPECT A Q4 BEAT

We’re still above the Street, but so is the buy side.

 

 

The Street has come up on their Q4 EBITDA estimates for LVS since we put out our Macau EBITDA estimates (“MACAU MODEL UPDATES”, 1/6/13) and our hold adjusted estimates (MACAU: EXAMINING THE Q4 HOLD IMPACT,  1/7/13).  However, we remain above the Street although buy side expectations are likely more aligned with us.  Thus, we’re not sure a Q1 beat will be much of a catalyst.

 

Here are our projections:

 

OVERALL


Our Q4 revenue and EBITDA projection for LVS is $3.07BN and $989MM which are about 2% above the Street.  We’re solidly above the Street for Macau, slightly below for Singapore, and below the Street for Las Vegas.

 

MACAU

 

Our estimate for Macau property-level EBITDA (ex ferries) and net revenues is $596MM and $1.92BN, 12% and 10% above the street, respectively.  Sands and Sands Cotai played lucky this quarter, while FS played unlucky.  Venetian’s hold was just a little above its historical norm.  On a portfolio basis, we estimate that hold benefited EBITDA by $12MM or 2% in the quarter.  We estimate that hold across Sands China’s portfolio was 2.98%.  

 

Venetian


Venetian is projected to report net revenue of $821MM and EBITDA of $310MM, -7% and -18% compared to the Street, respectively.

  • Net gaming revenue of $710MM
    • $270MM of net VIP revenue     
      • RC volume of $13.4BN, down 1% YoY
        • Junket RC volume dropped 4% YoY to $9.4BN.  We assume that direct play of $4BN was up a bit from $3.4BN in 3Q, but in-line with a direct play rate of 30% (same as 3Q)
        • Hold rate of 3.00%, which is 7bps above the property's historical hold rate.  We estimate that high hold benefited net revenues by $6MM and EBITDA by $4MM.
      • Rebate rate of 98bps or 33% of hold
    • Mass table revenue of $369MM, up 19% YoY
    • Slot win of $71MM
  • $111MM of net non-gaming revenue
    • $58MM of room revenue ($235 ADR/94% Occ/$221 RevPAR)
    • $23MMof F&B revenue
    • $64MM of retail, entertainment and other revenue
    • $34MM of promotional expenses
  • Variable expenses of $380MM
    • $328MM of taxes
    • $32MM of junket expenses assuming a commission rate of 1.22% (rebate + promoter expense )
    • $28MM of recorded non-gaming expense
  • $103MM of fixed costs, up 8% YoY

Sands Macau


We expect Sands to report net revenue of $309MM and EBITDA of $90MM, +3% and +15% compared to the Street, respectively.

  • Net gaming revenue of $301MM
    • $122MM of net VIP revenue    
      • RC volume of $5.7BN (down 25% YoY) assuming 9% direct play and a hold rate of 3.37%
      • Rebate rate of 125bps or 37% of hold
      • Assuming historical hold of 2.94%, net revenues and EBITDA would have been $15MM and $7MM lower, respectively
    • Mass table revenue of $152MM, up 2% YoY
    • Slot win of $28MM
  • $8MM of net non-gaming revenue
  • $164MM of variable expenses
    • $145MM of taxes
    • $10MM of junket expenses assuming a commission rate of 1.42% (rebate + promoter expense ) or 42%
    • $4MM of recorded non-gaming expense
  • $51MM of fixed costs, up 4% YoY

 Four Seasons

 

We estimate $284MM of net revenue and $75MM of EBITDA, +10% and +7% compared to the Street, respectively.

  • Net gaming revenue of $253MM
    • $184MM of net VIP revenue    
      • RC volume of $11BN, up 46% YoY
        • Junket RC volume is up 69% YoY to $9.2BN. We assume that direct play is close to the $1.7BN or 16% of total RC.
      • Hold of 2.54%, 25bps below the historical hold at FS.
      • Rebate rate of 86bps or 34% of hold
      • Using historical hold rate, we estimate that net revenue and EBITDA would be $18MM and $6MM higher, respectively.
    • Mass table revenue of $57MM, up 28% YoY
    • Slot win of $12MM
  • $44MM of net non-gaming revenue
    • $11MM of room revenue
    • $6MM of F&B
    • $27MM of retail, entertainment and other
    • Promotional expenses of $12MM
  • $170MM of variable expenses
    • $136MM of taxes
    • $26MM of junket expenses assuming a commission rate of 1.10% (rebate + promoter expense )
    • $9MM of recorded non-gaming expense
  • $30MM of fixed costs, up $4MM QoQ

Sands Cotai Central


We estimate $507MM of net revenue and $122MM of EBITDA, +20% and +28% compared to the Street, respectively.

  • Net gaming revenue of $454MM
    • $210MM of net VIP revenue    
      • RC volume of $9.9BN
        • Junket RC volume of $8.3BN.
        • We assume direct play of 9%, which implies a hold rate of just 3.22%. Direct play in 3Q was approximately 9%.
      • Rebate rate of 109bps or 34%
      • Assuming theoretical hold of 2.85%, net revenue and EBITDA would be $22MM and $8MM lower, respectively.
    • Mass table revenue of $190MM
    • Slot win of $54MM
  • $53MM of net non-gaming revenue
    • $50MM of room revenue
    • $19MM of F&B
    • $12MM of retail, entertainment and other
    • Promotional expenses of $28MM
  • $253MM of variable expenses
    • $219MM of taxes
    • $25MM of junket expenses assuming a commission rate of 1.35% (rebate + promoter expense )
    • $22MM of recorded non-gaming expense
  • $110MM of fixed costs

SINGAPORE


We project $703MM of net revenue and EBITDA of $366MM, -4% and -1% compared with the Street, respectively.

  • Net gaming revenue of $547MM
    • $167MM of net VIP revenue     
      • RC volume of $10.8BN, flat YoY
      • Hold rate of 2.80%
      • Rebate rate of 1.25%
    • Mass table revenue of $245MM
      • Drop of $1.1BN, down 5% YoY and 22.5% hold
    • $136MM of slot & EGT win
  • $156MM of net non-gaming revenue
    • $85MM of room revenue ($366 ADR/99% Occ/$363 RevPAR)
  • $68MM of gaming taxes and $36MM of GST
  • $227MM of fixed costs, compared to an estimated $227MM in 3Q and $228MM in 2Q

LAS VEGAS


We estimate that Venetian and Palazzo’s net revenues will be $334MM with EBITDA of $74MM, -7% and -18% compared to the Street, respectively.

  • Net casino revenue of $129MM
    • Table revenue of $106MM
      • Drop of $559MM, up 5% YoY
      • 19% hold
  • $46MM of slot win
    • $536MM of slot handle, up 3% YoY
    • 8.6% hold
  • Rebates of $24MM or 4.2% of GGR
  • $110MM of room revenue - $168 RevPAR (-3% YoY)
  • $120MM of F&B, retail & other revenue
  • $23MM of promotional allowances or 16% of GGR
  • Flat YoY operating expenses of $249MM

BETHLEHEM

 

We expect Sands Bethlehem to report $120MM of revenue and $33MM of EBITDA, +5% and +21% compared with the Street, respectively.

  • $109MM of gaming revenues
    • Table revenue of $39MM
    • $70MM of slot win
  • $11MM of net non-gaming revenue
  • $45MM of taxes
  • $43MM of operating expenses

OTHER

  • D&A: $232MM
  • Rental expense: $10MM
  • Corp and stock comp expense: $64MM
  • Net interest expense: $61MM