Better Buy: Las Vegas Sands or MGM?

• Report this Comment On July 19, 2010, at 4:15 PM, Senescent wrote:

  Bizarrely, you give MGM the edge on operations because LVS has had more capital expenditure in the past year - that's not operations, it is investment in growth opportunities.

  And let us examine where MGM has spent its money most recently vs LVS. MGM spent $8 billion jointly with a bankrupt partner (Dubai World) on a boat anchor in Las Vegas called City Center. There may come a time to buy MGM - AFTER Dubai World dumps its holding.

  LVS has just opened the fabulous Marina Bay Sands in Singapore where it enjoys duopoly status and a 10 year low tax rate. Given my druthers, I'd rather spend $5 billion in Singapore than $8 billion in an overcapacity market like Las Vegas. Beyond that, LVS (via Sands China Limited) is expanding in Macao - a market that is already larger than Las Vegas and growing at better than 20%/year long term.

• Report this Comment On July 19, 2010, at 5:07 PM, TMFBomb wrote:

  @Senescent,

  Fair point on capex. I included it in operations because management decides whether to expand or focus on current operations.

  I think the "sexier bet" victory by LVS and the "safer bet" section cover your second point.

  -Anand

• Report this Comment On July 19, 2010, at 5:19 PM, spokanimal wrote:

  To describe LVS's Marina Bay Sands as "a few other properties" is like saying the gulf coast is pristine except for "that little, tiny oil leak".

  Marina Bay is the 2nd most expensive gaming resort ever built (behind citycenter) and is guaged by many analysts as probably the most profitable gaming resort on planet earth.

  MGM owns 1/2 of a Macau resort with 8% market share (4% for MGM) while LVS commands 22% of Macau share and 3 TIMES the EBITDA of their closest competitor there.

  HOLY COW... your article has to be the WORST article I've ever seen on the subject of gaming Anand!

  S.

• Report this Comment On July 19, 2010, at 5:41 PM, spokanimal wrote:

  And regarding operations:

  MGM isn't spending on Cap-x because they CAN'T... they're strapped with low cash and high debt.

  LVS can spend on cap-x, and they are... in the fastest-growing gaming regions on earth. Once completed, their new development on Cotai (That's in macau, Anand) will augment Venetian across the street with 6,000 sorely needed hotel rooms and push the revenues LVS derives from Asia to 90% (I noticed that the LVS properties you mentioned most prominently were the Vegas properties... LVS is an Asian company, Anand).

  Given their "operational" successes and venue locations, who do you think will be the marquis selection for a license in Japan when that "virgin" venue opens up?....

  .... the hint for that question comes from Singapore.

  You've GOT to spend more than 2 minutes researching your articles, Anand!

  S

• Report this Comment On July 19, 2010, at 5:45 PM, MutualFundMonday wrote:

  @ Anand

  "Round 2: Operations

  This is a more fun call when companies are profitable. Neither of these guys has been profitable since 2007. However, MGM has at least dropped its capital expenditures so that it has positive free cash flow in the trailing 12 months. Advantage: MGM."

  Is this a joke? Did you even look at the Q1 IS and CF statements of these companies? If you did, you would have seen that LVS is on the verge of positive GAAP earnings while MGM is still many, many quarters off. As for free CF, MGM's CF recently has been mainly attributable to a debt offering and a tax refund. Not exactly robust. Meanwhile, LVS's cash flow is increasing at a greater rate with the improved Macau operations and will be much better in Q2 with MBS online.

  Geez man. Please look up the financials first!

• Report this Comment On July 19, 2010, at 5:57 PM, spokanimal wrote:

  Round 3 Operations:

  Have you noticed the change in EPS estimates for Q2 or LVS in the past week?... boosted from 6 cents to 9.

  EBITDA estimates for Marina Bay are running north of $800 million for 2011... UBS upped their MBS EBITDA estimate from $600m in April to $790m in May to $870m in late may.

  With many more City of Dreams patrons spending time at Venetian than vice-versa, where do you suppose Galaxy Cotai patrons will be spending their time once that resort is finished next year?....

  .... hint, Galaxy Cotai targets "less affluent" patrons, it's located "off strip", but it's BIGGG....

  .... and it's RIGHT BEHIND Venetian.

  Actually, this probably belongs in your "sexier bet" category, huh?...

  Is MGM's 1/2 of an 8% Macau share with no further development plans "sexy"????

  S

• Report this Comment On July 20, 2010, at 12:19 PM, vicapollo wrote:

  Operations and capital expenditures are very different things... Horrible article. Show no real research or understanding of subject or the business he is writing to or the audience that is being addressed.

• Report this Comment On July 20, 2010, at 2:15 PM, TMFBomb wrote:

  @vicapollo,

  See my comment to Senescent.

  @ spokanimal,

  I should have specifically talked about Marina Bay Sands (and possibly Bethlehem as well).

  @MutualFundMonday,

  Debt offerings aren't a part of free cash flow. And I used trailing 12 months data.

  -Anand

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