LVS: GRAND SLAM IN MACAU

LVS may have struck out in Las Vegas in Q2 and higher corporate expense is never a hit. However, these issues shouldn’t overshadow some home run trends at Venetian Macau. Adjusted Q2 property EBITDAR of $140.2 million exceeded expectations. More importantly, the trend is higher. The property should generate its highest VIP volume this month since November. On the mass market side, July should exhibit the best gaming volume month ever at the property. The data confirms our 7/24/08 call that foot traffic at The Venetian Macau picked up considerably in July. What’s driving the improvement? On the VIP side, higher junket commission rates and more direct marketing and credit have been the key drivers. Within the mass market, the ramp up of LVS’s ferry service appears to be the main catalyst. The following chart shows the number of ferry passengers carried daily by LVS to the Cotai Strip. The trends are obviously encouraging and have driven visitation to The Venetian up 28% in July. I remain very cautious on Las Vegas and some aspects of the Macau market, but with a huge short interest, LVS’s stock could continue to drive in some runs over the near term.