Thursday, July 29, 2010

Las Vegas Sands (LVS) Wins Bets in Asia in Q2

Stop me if you've heard this one before: an American company who has booming revenue in Asia while domestic operations report yet another quarter of "meh" (aka the 17th month in a row of 'green shoots').  Las Vegas Sands (LVS) is yet another one, as we see in yesterday morning's report.  (full report here)  The stock had a very good session in a neutral to poor tape.  With Macau in full tilt, and the newer operations in Singapore ramping up, it looks like more of the same in the quarters to come.

American company?  After the transformation the past decade, only in theory.
  • Sands operates the popular Venetian and Palazzo casinos in Las Vegas as well as casinos in the Chinese gambling enclave of Macau, in Singapore and in Bethlehem, Pa. Nearly 80% of its revenue came from Asian business.
After buying a trading position in this name off the lows 3-4 weeks ago below S&P 1020 I have traded out of the majority of the position for a quick 9% gain but the stock has kept running, while I've been staring at a measly 100 shares waiting a stronger pullback to redploy.

Marketwatch (and AP) discusses earnings:
  • Booming business in Macau helped Las Vegas Sands dramatically narrow its second quarter loss and far exceed Wall Street expectations, the casino operator said Wednesday. 
  • The company lost just $4.7 million, or about 1 cent a share, on the period, vs. a loss of $222 million, or 34 cents a share, in the same quarter of 2009. On an adjusted basis, excluding charges, the company would have earned 17 cents a share, up from a penny a share.  The average estimate of analysts had been for Sands to earn 9 cents a share on revenue of $1.58 billion.
  • Revenue came in at a record $1.59 billion, an increase of 50.6% that was fueled by heavy play at its Macau operations and the opening of the new Marina Bay property in Singapore.
  • Chris Woronka of Deutsche Bank reiterated his buy rating on Sands following the results.   "Particularly encouraging was the margin result at Marina Bay Sands during its first partial quarter of operations," he wrote. "This should boost investor confidence in what some had viewed to be lofty long-term earnings expectations at the property."
  • Analyst Joseph Greff of J.P. Morgan said the company's performance beat very high expectations and was especially strong in Singapore, where the Marina Bay Sands casino opened in April. Sands reported $216.4 million in revenue there, including $190.8 million from gambling.  "These are pretty strong results for a property that was only open 65 days in the quarter, without a lot of non-gaming amenities," Greff told investors.
  • The Singapore hotel was nearly 55% occupied at an average room rate of $226 per night. (translation - just wait until it can get 80%+ occupied)

2 years ago Las Vegas Sands was facing an onerous debt load, and doubts about its ability to exist as a going conern drove the stock to near zilch.  Now the story has changed dramatically as the banks gave it massive leeway (casinos are too big to fail after all). [Apr 22, 2009: Wynn Resorts, Las Vegas Sands Amend Credit Terms]   Still a lot of debt but most has been pushed quite far out.  [Sep 3, 2009: Las Vegas Sands - Too Big to Fail?]
  • Sands said it had $3.69 billion in unrestricted cash and short-term investments as of June 30.  The company reported long-term debt of $10.4 billion, with $90.2 million due in 2010 and $1 billion due in 2011.

[May 7, 2010: Las Vegas Sands Narrows Loss]
[Feb 24, 2010:  First Phase of Singapore Casino for Las Vegas Sands to Launch in April]
[Nov 9, 2009: Las Vegas Sands Sets Hong Kong Macau IPO Range of $2.5B to $3.3B]

Long Las Vegas Sands in funds; no personal position

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