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Takeaway: Details don't live up to the headline beat. Underlying metrics look weak across the board


  • Despite Macau challenges, pretty good quarter
  • Mainland China visitors are increasing (14% YoY)
  • 13K room supply in Macau (45% market share)
  • $1.4m net sq ft of retail mall offerings (70% of Macau)
  • After completion of Parisian, expect to double retail offerings in future
  • CoD Dancing Water do not have much repeat customers
  • Sands' 15k arena in contrast brings back plenty of repeat customers
  • 35% EBIDTA share in 1st 9 months of 2014 (up from 32% for same period in 2013)
  • Singapore:  MBS has 60% EBITDA share
  • 80% of operating profit in both Macau and Singapore was due to Mass and non-gaming
  • Macau strategy:  anchored about mass market
  • Mainland Chinese to HK grew 16% YoY
  • Over the past four years, the VIP component of GGR have hardly grown
  • Have been delivering on Macau's diversification (MICE, retail, entertainment, convention, employment opportunities on tour sights)
  • 2015 MICE attendance will represent >80% of Macau's convention attendance
  • 95% leased at Parisian
  • 22,000 employees (promoted just under 2,500)
  • Hedgeye thinks VIP/mass hold-adjusted, ex property tax refund, MBS EBITDA was closer to US$355m, which would be close to our estimate of US$347m but below the Street.
  • Asian opportunities:  Korea/Japan/Vietnam
  • S&P/Fitch:  investment grade rating for LVS
  • The Company's Board of Directors Raised the 2015 Annual Dividend to $2.60 per Share, an Increase of 30% Over 2014; increased dividend will be made on March 31, 2015
  • $1.66bn stock capacity remaining under its buyback program

Q & A

  • Macau mass margins (slide 13):  why not move more tables to base mass since they are higher margin?  The reason is because the market is in flux. 
  • MBS mass:  premium mass ex Singaporeans have grown that property's business 
    • Didn't mass volumes fall at MBS?
  • Macau VIP margins:  don't move that much, dependent on hold
  • Macau premium mass margins: in downturn, they can't adjust payroll that quickly; focusing on reducing opex other than labor
  • Pleased with overall Macau margins but room for improvement
  • Parisian govt:  nothing wrong with $11/12k win/table.  Want fair share of tables.  Earn more EBITDA/table in Macau than double gross in Vegas 
  • Sands China:  leader in non-gaming income (80% market share)
  • Sands China special dividend is because of a special reason
    • Would rather have regular dividends since they are reliable and predictable
  • Mass competitive environment:  it is changing.  Confident on 'new Macau' model - mass based, non-gaming based model.  Other operators' margins will come down a little bit because there 'is less at the top'. 
  • Las Vegas:  REVPAR down 2.7%; no change in strategy.  Competitors have done better.  Wynn/Bellagio dominant players in baccarat.
  • Full smoking ban?  Will abide by whatever government says 
  • Intent to grow dividend by 10% each year
  • Hurt by lower performance from a concentrated super premium mass segment but growth in base mass may offset some of that
  • Plenty of gaming capacity in Macau.  Big believer ETGs will grow.  Slots not as bullish.
  • Venetian Macau REVPAR decline: revisiting strategy on premium mass and base mass 
  • Parisian opening date: sometime in 2016.  Thinking about a possible partial opening (restaurants/entertainment)... will talk to new macau govt regarding construction labor. Will shuffle labor from St. Regis building once that is done to the Parisian. Do have the permits to complete the property. 
  • There are people looking for more labor
  • Sands has 58% of all concessionaires rooms
  • $91m property tax rebate:  relates to 5-year period. 9 cent after tax impact. Going forward, it will be a smaller property tax.
  • LVS stock down a lot more than where it deserves
  • Adelson have not sold one share of stock since 2006 (it was a secondary sale for diversification purposes)
  • Wondering when Galaxy will put in some MICE in their Galaxy Macau Phase 3/4/5/6