Las Vegas Sands Casinos – In Decline?

Posted: May 5, 2011 in Uncategorized

Special News Extracts & commentary

5th May 2011  Thur

Breakdown of Performance of Las Vegas Sands Corporation

Property                             Q4 2010 EBITDA                           Q1 2011 EBITDA

 Marina Bay Sands                 $305.8m                                            $284.5m

 Venetian Macau                  $235.6m                                             $228.4m

Sands Macau                        $93.4m                                               $92.6m

 Las Vegas Sands                  $80.6m                                               $65.2m

SINGAPORE DISAPPOINTS (A Key Factor)

LOS ANGELES/HONG KONG, May 4 (Reuters)- Billionaire Sheldon Adelson’s Las Vegas Sands Corp disappointed investors with a lower-than-expected quarterly profit at its Singapore casino-resort, sending the company’s shares down 10 percent.

…. But Singapore’s Marina Bay Sands, which started limited operations just about a year ago, generated adjusted EBITDA of $284.5 million, well below the average Wall Street estimate of $325 million.

The giant iconic building is located at the mouth of the Singapore river, while Genting Singapore Plc’s Resorts World, the only other casino in Singapore, is on Sentosa island.

The profit margin at the Singapore resort was 48.6 percent, down from 54.6 percent in the fourth quarter of last year.

“Everybody is freaking out about the Singapore margin,” said Hudson Securities analyst Robert LaFleur. “They are generating a phenomenal amount of EBITDA, but the question is we are going through the first year trying to figure out the true profit potential of that market.”

The $5.5 billion Singapore Sands, the world’s second-most expensive casino resort after MGM’s CityCenter in Las Vegas, held its official opening in February and company officials said at the time that it had already attracted 11 million visitors.

Unlike other gambling jurisdictions, including Macau and the U.S. state of Nevada, the city-state does not announce monthly gambling revenue totals, making it more difficult for investors to gauge the market.

“There is nothing whatsoever that makes us think margins will decrease,” Adelson said on a conference call.

What The Editorial Team Say:

(1)  First thing first, this is really the watershed for Las Vegas Sands performance in Asia. That analysts could no longer just base on myths and over-valued LVS stock prices.

(2)  Singapore casino market (or rather, Southeast Asian market) seems to show its weakness. The market size has been overly estimated by many analysts during the IR’s initial period of fresh attraction. Now the music seems to slow down. Apparently, the local participation rate is coming down! Malaysian visitation numbers have also reduced, according to the busing program contractors.

(3)  Macau’s Ebitda would fall as well. There’s another mega resort Galaxy Resort is opening on 15th May 2011. But the fact remains, there isn’t significant growth in mass market gaming segment for the territory at all. That will further push casino operators into the junkets’ ‘killing ground’ by giving them more profit-sharing and hence, further weakening casino’s Ebitda margin.

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Comments
  1. Alan Koo says:

    Really can’t agree more with the article especially editorial commentary. Looks like Sands might be washed away gradually if they can’t turn the tide.

    – ALAN

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