LVS 4Q12 REPORT CARD

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

  • BETTER - Very strong quarter in Asia with hold adjusted EBITDA in excess of consensus.  While volumes are usually inflated when hold is low (players play longer when they are winning), they were quite exceptional in Singapore and Macau.  We calculate hold adjusted EBITDA do be a little lower than management's calculation, but still strong enough to beat our hold adjusted estimate for Q1.

MACAU

 

HOLIDAY INN/SHERATON

  • SAME:  Sheraton is doing very well.  They are fully booked for the upcoming Chinese New Year.
  • PREVIOUSLY:  “Holiday Inn is running at extremely high rates. The Conrad has more demand than it has supplies and the Sheraton just opened recently last month and we're doing splendidly at the Sheraton."

MACAU MALL VALUE

  • SAME:  Still believes the retail malls are worth $9-10 billion.  They are not in any hurry to sell them.
  • PREVIOUSLY:  "We've got about $9 billion to $10 billion today. And I'm not going to sell Macao until we finish the bridge which is next month, in December, and we let in the cross traffic....If it does impact it well, I think we could probably reach another billion or maybe more....In terms of monetizing it, we should wait until we get the approval for the Tropical Mall and we put the new retail in Lot 3. So we're still in the midst of that in any event, this is a good turn. There's a good cap rate."

MACAU RETAIL

  • BETTER:  Still sees very significant growth ahead for retail stores in Macau.  
  • PREVIOUSLY:  "We also have 26 more stores opening in the Four Seasons, 43 more stores opening and five in Cotai Central, and the potential of an 800,000 square foot, 300 store mall next to the Sheraton on the Tropical Garden space. So there's a lot more retail to mature for us to essentially maximize that retail facility."

SANDS COTAI CENTRAL

  • SAME:  SCC EBITDA came in-line with the Street.  Margins of 22% were 4% points better sequentially.
  • PREVIOUSLY:  "Sands Cotai numbers are good, but they can be better. Again, the margins are hurting a bit due to a lack of premium mass."

 

SINGAPORE

 

MARKETING PROGRAMS IN PREMIUM MASS

  • SLIGHTLY WORSE:  mass drop fell 3.2%.  LVS sees growth potential to add more customers in this segment in 2013.
  • PREVIOUSLY:  
    • "We're implementing new marketing programs to both the premium mass market and VIP markets, beefing up our sales force and investing in aircraft. The customers we are targeting with these efforts will come from the areas surrounding Singapore: Indonesia, Malaysia, Thailand, and the wider Southeast Asian region as well as from Hong Kong, Taiwan, China, Japan, and Korea, and Vietnam."
    • "We're putting a team on the ground, incentives on the ground to try to drive more of that premium mass customer into Singapore, more tourist-driven and we think it's going to be very successful. We have started that a few months ago. We're looking to put a lot of boots on the ground and our belief is that's the growth in Singapore in the near future."

VIP RC TRENDS

  • MUCH BETTER:  VIP RC was up 53% to $16.5 billion.  They did not see much change in VIP concentration relative to last quarter.     
  • PREVIOUSLY:  "I think it's stayed pretty flat....Singapore looks like a $45 to $50 billion annualized gold market at this time... We don't fear the credit side. We just would like to see more demand in the right kinds of customers. So our bigger challenge, very candidly, is going to be to make sure that premium mass growth returns again. That's the margin 65% plus we'd like to get back to and that's the segment we're really focusing on as far as we think there's short-term appreciation hope."

SLOT/MICE/RETAIL/ENTERTAINMENT

  • MIXED:  Slot handle fell 2% YoY, however, LVS sees a recovery in slot volumes going forward.  Mall revenues gained 12% YoY.  Convention, Retail and Other revenues fell 0.7% YoY.
  • PREVIOUSLY:  "Slot revenue has decreased by 8% this quarter... because of a decrease in local play. This concerns us and we are putting strategies in place in terms of how we can replace that business with additional business that we're after. The hotel room and MICE businesses have performed exceptionally and are operating at near capacity. There is rarely an empty room in the Marina Bay Sands these days. Retail has also grown meaningfully and we are in the process of developing additional dining and entertainment offerings in our mall."

 

DEVELOPMENT OUTLOOK & UPDATES 

 

JAPAN

  • SAME:  LVS is still very interested in this opportunity and are waiting patiently. 
  • PREVIOUSLY:  "In Japan, we are awaiting legislation, which is supposed to be submitted in April to the Diet. After that, there will be an approval process for a year or maybe two as it goes through the Japanese procedures. We're looking at sites in both Osaka and Tokyo and we continue that investigation and have people hired on the ground working on our behalf."

 

OTHER

 

DIVIDENDS

  • BETTER:  LVS paid a special dividend of $2.75 per share and a recurring dividend of $0.25 in 4Q.  Las Vegas Sands has increased the recurring quarterly dividend of the company by 40% to $0.35 per common share, or $1.40 per common share per year, beginning in 1Q 2013
    • PREVIOUSLY:  "We have every intention of increasing the dividend in the years ahead as our business and cash flows continue to grow."



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