LVS: WHAT WILL BE GOOD ENOUGH?

Business is great and expectations are high.

Hopefully, non-recurring expenses won’t be large enough to pull net income into the red again, so LVS will finally show fully diluted shares on the income statement.  Maybe then all of the analysts will finally get the share count right going forward instead of using the much lower number of ordinary shares.  It is extremely unlikely that “non-recurring” items will exceed our forecast of $280 million in pre-tax income.  With Singapore open for a full quarter, it will be interesting to see how much of charges LVS will take.  There were a total of $88 million in Q2.

One time charges notwithstanding, we’re pretty sure LVS will put up an outstanding quarter.  Will it be enough?  Probably not.  Whisper expectations are very high and the sentiment surrounding the upside in Singapore almost seems limitless. 

We think that LVS will report $1,856MM of revenues and $558MM of EBITDA for Q3, beating consensus by 5.5% and 9.5% respectively.  Given the 41% run up in the stock since late August, we think expectations are high – especially on Singapore.   We’re basically in-line with the street on Macau, 7% above on Vegas and 30% higher on Singapore. However, we’re pretty sure that buy side expectations – especially on Singapore – are far ahead of consensus estimates.  Sheldon's recent speech mentioning how MBS was on a run rate of $90-100MM in EBITDA per month probably has something to do with the divergence in expectations and consensus.

3Q2010 Detail:

We expect Venetian & Palazzo to report $64MM of EBITDA on $272MM of revenues.

  • Slot handle growth of 2.3% and slot win of $53MM
  • Table drop growth of 8% and win of $82MM. As a reminder, last quarter hold was only 13.8% in Vegas and was only 12.2% in 3Q09.  So assuming normal hold, we expect to see a huge improvement in EBITDA this quarter both sequentially and YoY.
  • $135MM of casino revenues, net of $11MM in rebates
  • $189MM of non-gaming revenues less promotions & discounts of $41MM (30.5% of gross gaming revenue)
  • We expect total operating expenses to increase 5% YoY to $203MM (compared to $210MM 2Q2010)

We estimate that excluding the $6.5MM loss on “ferry and other Asian expenses”, LVS’s 3 Macau properties will report $295MM of EBITDA on $1,032MM of revenue.  We’re roughly in-line with the street on our EBITDA estimate for the combined Macau properties.

  • We estimate that Sands will report $287.5MM of revenues and $74.5MM of EBITDA (6% below the street)
    • $23MM of slot win and Mass revenue of $132MM
    • RC volume of $6.15BN with a hold rate of 3.03%, producing gross win of $186MM
    • We assume a 97bps rebate rate and a 1.33% commission rate
    • Net casino revenue of $281MM and net non-gaming revenue of $6MM
    • $164MM of variable expenses comprised of taxes, junket commissions, gaming premiums, and estimated bad debt expense
    • $45MM of fixed expenses and $3MM on non-gaming related expenses
  • We have Venetian reporting $606MM of revenues and $196MM of EBITDA (6% above the street)
    • $56MM of slot win and Mass revenue of $245MM
    • RC volume of $10.8BN with a hold rate of 3.05%, producing gross win of $330MM
    • We assume a 92bps rebate rate , a 1.24% commission rate and 23% direct play
    • Net casino revenue of $532MM and net non-gaming revenue of $74MM
    • $296MM of variable expenses comprised of taxes, junket commissions, gaming premiums, and estimated bad debt expense
    • $95MM of fixed expenses and $19MM on non-gaming related expenses
  • We estimate that Four Seasons will report $139MM of revenues and $25MM of EBITDA (6% above the street)
    • $8MM of slot win and Mass revenue of $27MM
    • RC volume of $5.5BN, assuming 50% direct play, and a low hold rate of 2.56% producing gross win of $141MM
    • We assume a 90bps rebate rate , a 1.11% commission rate
    • Net casino revenue of $126MM and net non-gaming revenue of $12MM
    • $84MM of variable expenses comprised of taxes, junket commissions, gaming premiums, and estimated bad debt expense
    • $25MM of fixed expenses and $5MM on non-gaming related expenses

We expect Marina Bay Sands to report $464MM of revenues on $236MM of EBITDA compared to the street estimate of $180MM.  As a reminder, MBS reported $94MM of EBITDA in 2Q2010 despite a 2.18% hold and only a partially open hotel.

  • $425 win per slot, $834MM handle, and $63MM of slot win
  • RC volume of $9.5BN and gross win of $266MM
  • We assume a 1.2% commission/rebate rate
  • Net casino revenue of $397MM and $67MM of net non-gaming revenue
  • $88MM of variable expenses comprised of taxes and estimated bad debt expense
  • $140MM of fixed expenses

Other stuff:

  • We expect Sands Bethlehem to report $82MM of revenues and $14MM of EBITDA (5% above the street)
  • D&A of $188MM