LVS: WE ALL KNOW IT WILL BE A GOOD QUARTER

LVS should have a pretty good quarter and we expect them to be fairly bullish about the opening of Marina Bay Sands, the hot streak in Macau, and stabilizing trends in Vegas.

 

 

The question is, will it be good enough?  We’re above the Street on most Q4 metrics but LVS may need to beat our numbers and convince the Street to raise 2010 estimates for the stock to go higher.  Whisper expectations are pretty high, and justifiably so. Macau is booming, particularly the VIP side.  January was huge and with the calendar shift of the Chinese New Year into February from January last year, expectations are that February could be an even bigger month.

 

We generally share that view although we do have some concerns.  First, the tightening by the Chinese government should eventually work its way to the VIP business, which is heavily reliant on liquidity and credit.  While any impact on February will likely be masked by the Chinese New Year impact, March could see a big slowdown. In our 1/26/10 post, “MACAU VIP AND THE MACRO VARIABLES”, we showed that China economic indicators had a material impact on driving VIP business.  Our second concern is with the 20% increase in Mass table supply after Wynn Encore opens later this quarter.  Finally, our sources have indicated that SJM plans to get very aggressive on stealing VIP market share, even at the expense of margins, this year.  This could pressure Macau margins.

 

 

Q4 PREVIEW

 

We expect LVS to report $320MM of EBITDA on $1.3BN of revenues in 4Q09 compared to consensus of $282MM of EBITDA on $1.235BN of revenues. 

 

Las Vegas

  • Revenue of $295MM and EBITDA of $98MM
  • Slot handle down 11% y-o-y  with 7% slot win (company implied it would be higher though), table drop up 2.4% y-o-y and 19.5% hold
  • Venetian RevPAR of $163 (down 13%) and Palazzo RevPAR of $169 (down 19%)
  • Operating expenses of $197MM, down 17% y-o-y

Macau

  • Sands:  $295MM of net revenue and $77MM of EBITDAR
    • VIP:  RC drop of $6.7BN (11% direct play) and $211MM of win, so an estimated hold % of 3.16%
    • Mass win of $117MM and slot win of $22MM
    • Variable expenses (taxes, gaming premium, commission in excess of contra-revenue cash back already captured in net revenue) of $174MM
    • Fixed expenses and cost of non-gaming revenues of $43MM (flat with 3Q09)
  • Venetian:  $559MM of net revenue and $172MM of EBITDAR
    • VIP: RC drop of $10.2BN (20% direct play) and $313MM of win, so an estimated hold % of 3.07%
    • Mass win of $202MM and slot win of $48MM
    • Variable expenses (taxes, gaming premium, commission in excess of contra-revenue cash back already captured in net revenue) of $284MM
    • Fixed expenses and cost of non-gaming revenues of $103MM
  • Four Seasons:  $83MM of net revenue and $12.4MM of EBITDAR
    • VIP: RC drop of $3.65BN (25% direct play, could be higher though last Q was 50%) and $76MM of win, so an estimated hold % of 2.09%
    • Mass win of $18MM and slot win of $5MM
    • Variable expenses (taxes, gaming premium, commission in excess of contra-revenue cash back already captured in net revenue) of $51.4MM
    • Fixed expenses and cost of non-gaming revenues of $19.5MM

Sands Bethlehem

  • Revenues of $58MM and EBITDA of $9MM
  • Reported gaming revenues of $54MM and total revenues of $58MM
  • Reported state taxes of $29.5MM and $20MM of other operating expenses

 

JANUARY 2010 NUMBERS

 

Below are January numbers for LVS's Macau & PA properties from our proprietary database

 

Macau

  • Sands:
    • $2.1BN of RC volume, high hold of 3.36% assuming 12% direct play for a VIP revenues of $71MM
    • Mass win of $47MM and slot win of $8MM
  • Venetian:
    • $3.3BN of RC volume, high hold of 3.5% assuming 20% direct play for a VIP revenues of $116MM
    • Mass win of $74MM and slot win of $18MM
  • Four Seasons:
    • $1.16BN of RC volume, high hold of 3.06% assuming 27% direct play for a VIP revenues of $37MM
    • Mass win of $10MM and slot win of $2MM

 

Sands Bethlehem

  • They added 250 slots in December and reported state gaming revenues were $21.3MM. Slot win per day increased to over $211

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