Las Vegas Sands Shines On

Macau has helped Las Vegas Sands (NYSE: LVS  ) and other casino companies multiply their profits several times in the past. However, in 2011, Las Vegas Sands saw a drop in casino revenue growth in Macau to 42% from 58% in 2010.

If you ask me, this slowdown is nothing but a minor bump in the road, and the company's overall prospects still look bright. Read on to learn why.

The quarter
Compared with the year-ago quarter, revenues improved by a robust 26% to $2.54 billion, and earnings of $0.57 per share matched estimates. But what's new is that the company, which was filing for bankruptcy three years ago, will now pay a dividend of $1 per share.

Thriving Asian destinations such as Macau and Singapore contributed to most of the company's revenue. But interestingly, Vegas -- where the growth scenario has been largely stagnant -- also put up a good show, as its contribution to the company's quarterly revenue rose by 9.3%.

Incredible Asia
Double- and triple-digit casino revenue growth in Macau properties -- the Four Seasons Hotel, Plaza Casino, and Venetian Macau -- was the highlight of the quarter. Casino revenue earned from Macau increased by 20% to $1.14 billion, which alone accounted for a significant 43% of Las Vegas Sands' total quarterly revenue.

And that's not all. Increasing disposable income of urban Chinese people and better tourism facilities, such as transport and infrastructure, are expected to continue nourishing the gambling market in Macau. Adding to that, casino revenues in Sands' Singapore business also posted a noteworthy 44% increase to $807 million, thanks to visits from Asian high rollers.

What next?
Sands has almost captured a fifth of Macau's gaming market already. In the next six weeks, the company will launch its largest resort development, Sands Cotai Central in Macau. Sands plans to start attracting high rollers through its junket representatives for this 13.7-million-square-foot property.

Also, the company plans to build a 4,000-room theme casino in Macau that will have separate towers for the masses and high rollers. This is one area where Sands has a distinct edge over its competitors, as it already owns the land and is merely awaiting the Chinese government's permission to start construction, compared with companies such as Wynn Resorts (Nasdaq: WYNN  ) and MGM, which still don't have the lots.

Looks good to go
Sands' expansion spree does not stop here. The company wants to buy more land in Singapore to expand its casino business and add 1,500 more rooms. In future, Las Vegas Sands intends to enter into markets such as Japan, Korea, Taiwan, Vietnam, and India. That sounds quite action-packed. This stock looks like a good performer in the long run.

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Navjot Kaur does not own shares of any of the companies mentioned in this article. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On February 23, 2012, at 3:17 PM, cp757 wrote:

    Navjot Kaur you have done a great job on this story. I am very impressed by your balanced approach in telling the reader not only the facts but the projections of Las Vegas Sands direction in the market. I know you have focused this article on its Asian market in Macao. LVS will have the highest share of the 35 billion dollars of revenue going forward when Cotai Central opens in a few weeks.The star in LVS's crown is Cotai Central but Adelson also has Marina Bay Sands in Singapore which will exceed the revenue's in Las Vegas .Las Vegas Sands also has an untold story about Sands Bethlehem which is the number one casino in Pennsylvania, an area that has taken the east coast lead from Atlantic City. Sheldon Adelson may announce a new development in Barcelona Spain at any time. This will be a 22 Billion dollar Integrated Resort. Nearly 34.5 million passengers used Barcelona Airport. The distance between the airport and the Barcelona Cruise terminal is approximately 20 Km .The Cruise Ship terminal is the location for the new resort. Barcelona is the 4th busiest cruise ship port in the world; it had over 27,000 passengers in a single day .The most visited ports in Mediterranean Sea are Barcelona (Spain), Civitavecchia (Italy), Palma (Spain) and Venice (Italy). The train system in Europe allows every one to come from all areas at a very cheap price . You can buy tickets for train travel from London to Barcelona .All this is in place now and Adelson does not have to wait for the system to be built. Spain is talking about a low Tax or no Tax just to get Adelson to build. Las Vegas Sands is the biggest story in the sector and deserves more stories like yours.

  • Report this Comment On March 10, 2012, at 8:08 AM, cp757 wrote:

    This is the three year anniversary of the bottom of the stock market crash . Thirty six months for Las Vegas Sands share's to go from 1.38 cents a share to 54.83 dollars. That means if you had $13,800 dollars at the bottom of the crash on 03/09/2009 and you bought 10,000 shares you would now have $548,300 dollars on 03/09/2012. With 10,000 shares you would be paid $10,000 dollars on your dividend every year. That's a 72% return of the money you invested 36 months earlier, and that's just on the dividend, and over a 3,500% increase in your stock price. No other stock did that

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