While estimates have been rising, LVS should beat consensus EBITDA projections. Whisper expectations are high though. For the stock to react, Singapore will be the pivot.
LVS should beat the Street pretty handily and even top the recent high estimates. At $1.65BN of revenues and $440MM of EBITDA, we’re 5% and 17% ahead of consensus, respectively. We’re pretty comfortable with our Macau projection but Singapore will be the driver of upside/downside from our estimate. Singapore represents the pivot for the stock, in our opinion. If Singapore beats the Street and management provides comfort that Street estimates are too low for Singapore (in other words, our numbers are right), this stock will go higher. We’re not sure management can provide much incremental insight to Macau and Las Vegas.
Our estimates for FS and MBS are almost double consensus estimates. We’ve got proprietary property data so we know Four Seasons held very well during Q2. For MBS, our estimates are partly driven by our analysis of Resorts World Sentosa – namely $78MM of reported EBITDA but closer to $114MM when you add back the pre-opening charges. We don’t think that MBS numbers will be as strong coming out of the box given that Resort’s World had some distinct advantages including: 1) knowing the market better, for example in electronic games, since it has operating experience next door in Malaysia, i.e. Genting Highlands, 2) opening first and thus having no competition during its first quarter, and 3) a busing program.
LAS VEGAS:
- Net revenues of $280MM and $69MM of EBITDAR, in line with the Street.
- We estimate a 2% increase in slot handle and slightly higher hold.
- Table revenues down 6% due to market share losses to MGM.
- While Venetian had very low table hold in 2Q09, Palazzo had high table hold; net net table hold was about average in 2Q09 at 19.3%.
- Cost cuts should be lapped by now.
MACAU
Sands Macau:
- Projection of $301MM of net revenues and $74.5MM of EBITDA, in-line with the Street.
- Slot win of $23MM and Mass table win of $128MM, in-line with the Street.
- $7.1BN of RC volume and $217MM of VIP win (3.07% hold).
- Fixed costs flat sequentially.
Venetian Macau:
- We expect a huge quarter on the back of high hold and a very easy Y-o-Y comparison.
- We’re at $572MM of net revenues and $185MM of EBITDA, $6MM above the Street.
- Slot win of $50MM and Mass table win of $228MM.
- We expect RC volume to be down 5.5% YoY to $9.35BN but high hold of 3.4% will produce record VIP revenues of $322MM. The comp is easy as well since Venetian suffered from low hold of only 2.3% last year.
- Y-o-Y cost cuts should be lapped by this quarter.
Four Seasons:
- Results should blow away expectations given its nice ramp up and massive hold percentage. We expect FS to report $153MM of net revenues and $50MM of EBITDA versus the Street at $28MM.
- Slot win of $5MM and Mass table win of $26MM.
- We believe that FS’s junket RC volumes were $2.4BN. In 1Q2010, Four Seasons direct volume was $1.6BN, 43% of total RC volume or roughly $534MM/month. If we assume roughly 41% of total RC volume in 2Q2010 is direct, then total RC volume for FS would be roughly $4.1BN. Assuming our RC estimate is correct, FS appears to have held over 3.7%.
- Given the high percentage of direct play at this property, commissions have been quite low, so flow through should be good.
Total Macau:
- Excluding the cost of ferry operations and some other costs, LVS’s 3 properties could produce $310MM of EBITDA in 2Q on $1.025BN of revenues.
- Street is projecting $280MM.
SINGAPORE
Our projection for MBS is $261MM of revenues and $100MM of EBITDA (excluding any pre-opening charges) versus the Street at $73MM. Our assumptions are as follows:
- Slot: 1,450 slots at $500/win per day.
- Mass: 442 Mass tables, $500MM drop, 22% hold.
- VIP: 75 tables doing $25k/table/day, offering rebates of 90bps in 2Q2010, which we project will steadily rise in subsequent quarters.
- Hotels: an average of 950 rooms open, ADR’s of $250 and occupancy of 60%.
- Mall: only 20% of the square footage opened this quarter; we assume straight-line rents of $150/ per square ft.
- Fixed expenses of $105MM this quarter.