Takeaway: Grind mass the story, down 21% YoY with significantly bad margin implications in Q1 and going forward




  • Very hard to say whether Macau will get better in Q2
  • As confident as they have ever been in long-term outlook
  • At least 10% in regular dividend growth for next 3 years
  • LVS: leading company for integrated resorts projects
  • LVS: 97% Non-gaming space, 3% gaming space
  • MICE in Macau: 640k people in 2008, 1.8m people in 2014
  • LVS hotels account for 80% of lodging cash flow on Cotai
  • Stay fully invested in Macau in long-term
  • Today company is stronger than it has ever been
  • S'pore: LVS is the profit leader in both mass and VIP markets
  • Decline in VIP and premium mass segments contributed to EBITDA decline
    • What about the 21% decline in base (grind) mass revs?
  • Non-rolling win per day declined 6% QoQ. Base win per day declined 4% QoQ
  • Property visitation and non-gaming both declined 4% YoY in 1Q 2015
  • Hotel guests declined 10% in Feb 2015 vs Feb 2014. Occupancy declined 11% YoY.
  • Mix btw cash and comped customers have changed somewhat due to changes in hotel inventory.
    • Majority of cash-paying hotel customers do some gaming spend
  • MBS:  'surprisingly strong quarter'; hold-adjusted EBITDA was $371m. on a constant-currency basis, hold-adjusted EBITDA was up 3%
    • Highest 1Q mass win per day ever $4.7m ($5.0-5.5m on constant currency)
    • Prudent credit policy
  • Interested in Korea, Japan and Vietnam
  • No repurchase in stock in past quarter. Have $1.76bn available for stock repurchase.

Q & A

  • Why such low Macau margins?  Have incurred more non-gaming costs than competitors. Nothing unusual this quarter. 
  • No phone betting hurt LVS in junket business
  • Rather not go out and borrow money now 
  • Being more judicious with reinvestment to customers and advertising costs
  • Venetian base mass business busiest they have ever seen
  • Chance of Macau visitation cap: no chance whatsoever
  • HK-Macau bridge: one of their contacts thinks it could open in 2016/2017, not 2020
  • Re-examining all capex guidance for Parisian and other projects for cost cutting opportunities. Parisian need a labor boost, right now looking at late summer/Thanksgiving 2016 but could be as early as spring 2016 if they get the necessary labor
  • Falling hotel occupancy:  a lot more operators are now selling rooms rather than comping aggressively
  • S'pore occu fell:  currency issue. High-end suites (renting for $10k/day) had difficulty being filled. Still command the highest ADR in the market
  • Why not buyback any stock in 1Q?  Will be opportunistic in future. Wanted to protect dividends. 
  • Have a good vibe that one of the emerging markets will open up soon. Want to have enough cash for that opportunity.
  • Can't do special dividend growth, regular dividend growth and stock buyback all at same time

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