3 Reasons to Sell Las Vegas Sands Today

Today, Austin discusses three reasons to consider selling Las Vegas Sands (NYSE: LVS  ) . The company's exposure to foreign markets is a bit of a double-edged sword, with both huge promise and risks. China continues to slow, Singapore will soon crack down on gambling anew, and allegations of bribery plague the company's foreign operations as well. The company is positioned to placed an enormous bet on Europe, with Adelson's much-discussed EuroVegas, which could obviously go very wrong in the near future. Las Vegas Sands faces an uphill battle with new casino placements as well. After exhausting the high-growth markets, the company will see diminishing returns from additional locations. Still, Austin thinks that it is a dominant player within the industry and remains bullish on the stock overall.

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Austin Smith and The Motley Fool have no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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  • Report this Comment On July 21, 2012, at 2:16 PM, cbotrader wrote:

    Well...if you tell us why you should buy it...then tell us why you should sell it, you will never be wrong.

    Weather forcast today is sunny with a chance of rain.....

    I AM A TRADER....I DO NOT HAVE THAT LIBERTY TO TALK BOTH SIDES.

    I HAVE to make a decision one way or the other and live with it.

  • Report this Comment On July 21, 2012, at 2:58 PM, TMFBWItime wrote:

    @cbotrader

    I provided both sides of the las vegas sands investing thesis for readers to make the most informed decisions possible.

    As an individual investor I am very bullish on the stock and have recommended it as a top stock for 2012.

    I hope that helps your decision.

  • Report this Comment On July 21, 2012, at 3:18 PM, cp757 wrote:

    Chinese Food in " China Town "

    In the United States we have areas in many cities we call " China Town " and I thought I would try and find out if they have any "US Town" in China, and from what I can find, they don't. As it turns out they have cities that contain areas of British, French, and American settlement but nothing like ' China Town". The people love western culture and buy our products and drive our cars. They eat at McDonalds, Kentucky Fried Chicken, and Pizza Hut. We go to China town in the US to buy food that we associate with China or Japan but its still American. We don't really know what China is all about. We think we have the big cities in the United States and our cities are large. The top four largest cities by population in the United States are New York, with 8 million, Los Angeles, with 3.8 million , Chicago, with 2.8 million, and Houston, with 2 million, that's 16.6 million from the four largest cities.

    This year the number of people that will go to Macau to gamble will be twice the number of every man woman and child in New York, Los Angeles, Chicago, and Houston combined. What we don't understand about Las Vegas Sands and the rooms they are building on Cotai Central is Macau only has 21,695 rooms . Can you imagine inviting twice the population of those top four cities to visit and only have 21,695 rooms. Las Vegas has 140,000 rooms and developers where screaming to add more rooms when they had 70,000 rooms.

    Shanghai, is China's most populous city situated on the eastern coast of the country. Its like our New York and is a sea port on the estuary of the Yangtze River. Shanghai’s population is huge with 23 million people. That number only includes what’s commonly referred to as the “permanent population.” An additional 9 million are what’s called the “floating population.” They’re the migrant workers and their dependents who drift in and out of the city, working in factories, on construction sites and in the service industry. The" floating population.” in Shanghai is larger than New York, our biggest city. Shanghai is larger than our top 4 cities combined. Over 1 million people in Shanghai will go to Macau to gamble in 2012 so you can see how big that market could get. Over 10 million people will go to Macau from Guangdong province in 2012. That's almost as many people as the number of visitors to Singapore and a higher percentage of visitors to Macau gamble compared to the percentage of visitors that gamble in Singapore. If the people of China spent 2.5% of China's GDP on legal gambling in 2012 they would spend 182.5 billion dollars in Macau and they spend over 3 times that now on illegal gambling.

    The image Americans have of China is of a lot of poor people working in rice fields for low pay that can have only one child. The people of China are just like us, they have good jobs and they want cars and new houses and vacation's. The Chinese government requires that employees get 10 days off for vacation from work every year. Just like in the US, China has holidays as well and for the 3 major holidays the country basically shuts down and everyone goes home (literally). Vacation time in China is family time, and the 3 holidays are, Chinese New Year , that lasts for an official period of 9 days, Labor Day (May 1st) that lasts for 1 week, and National Day (October 1st) that lasts 1 week. All and all they have it good when it comes to vacations.

    The United States has 62 million cars on the road and China has modern freeways and all the modern bridges and roads like we have in the US but for 100 million cars. Its funny they have been growing the number of cars on the road by almost 30% a year for the last few years while the US has not done as well. They will need mechanics for those cars, and someone will have to sell batteries for them and windshield wipers, antifreeze,sparkplug's, and floor mats. They have Buicks, Cadilacs and BMW's. The Buick Excelle is China’s top selling car in 2011, moving 254,000 units. Thats one model and in 2011 Americans bought cars too, but the total lineup of Buick only sold roughly 178,000 vehicles in the USA by contrast. Coming in second in China was the VW Lavida, while the Chevrolet Cruze was third. GM and VW comprised 7 of the top 10 spots. The people of China are buying US cars. The Wuling Sunshine, a commercial van manufacturer in China, technically outsold the Excelle, with 731,000 units sold, but doesn't’t count as a passenger car in the same way that a Ford F-Series is classified separately

    An estimated 7 million new homes are built each year in China and the demand is increasing. By contrast the United States will do 760,000 homes in 2012 and we have the lowest interest rates in 35 years. If we could get to 1.5 million new homes a year that would create about 50,000 additional jobs a month so you can see what 7 million homes a year does for China. They are buying all the lumber they can get from around the world. The contractors are making billions of dollars on the trend, just like the United States did over the years but on a bigger scale. They need carpet manufacturers, window and glass manufacturers and all of this creates more millionaires that want to go on vacation. This is not "China may do this", or " when the economy picks up", this is what they will do this year. This is what they are doing now.

    The people in China love Mahjong, basketball, soccer, table tennis, billiard, badminton and card games. Everyone plays card games in China, all kinds of card games. Kids play card games at school. Businessman play cards on the trains on the way to work and if they get a chance they will go to Macau and play cards. One point three billion card players want to go to Macau. The inertia of what the Chinese government has put together is mind boggling when you think of the numbers. Because gambling is illegal in mainland China its estimated that the people of China gamble to the tune of 600 billion dollars a year nation wide now. Macau will do 40 billion in legal gambling in 2012 but the market is probably only limited by the number of rooms they can build in the next 10 years. I agree China's growth trajectory is less, we all know you cant grow at 40% in Macau for ever but for now the growth in gaming in Macau is at the very beginning. China may be slowing down its growth trajectory but compared to the US they are a rocket ship.

  • Report this Comment On July 21, 2012, at 3:49 PM, ravens9111 wrote:

    China hard landing will trickle in to Macau and Cotai. The growth in that region is unsustainable. LVS relies too heavily in Macau and Cotai for earnings growth. Earnings in Las Vegas have been flat for several years with no real recovery in sight due to the oversupply of gaming. As more locations are added in Macau and Cotai, the same problems will eventually persist. Room rates will go down, occupancy will increase, and gaming revenue will also decrease. Emerging markets may grow at a faster rate than developed economies. However, growth rates will not continue at the same rate in the future.

  • Report this Comment On July 21, 2012, at 5:37 PM, cp757 wrote:

    Austin I know you love Las Vegas Sands and I think with Las Vegas Sands getting 40% of the market in Macau in the next year you can see the growth potential you are looking at. I have no problem looking at the figures I put in the other report on this page and seeing that 182.5 billion dollars spent in Macau is very doable and 40% of that would be 73 billion dollars for LVS so future growth is not a problem.

    As to corruption Mr Adelson does one thing that I don't think any CEO does. He has a secretary write down everything he says every minute of every day about the company. If anyone wants to know what he said they just need to read the transcript.

    As to Spain. Adelson will put up 1.2 billion a year for the next 4 years in cash and have small payments on the balance of 6 or 7 billion as he goes, It may be less because of the massive EBITDA he will take in over the next 4 years.

    Stop and think about the people that use the product Adelson is selling. Las Vegas Sands ” Demographics” has mass market ( read regular Joe) and then they get the big money from people with High Net Worth that have 1 million dollars or more. How many millionaires can you get to come on vacation to your location. LVS will have three zones and the largest private airforce in the world to fly them to Adelsons resorts. Lets look at how many millionaires Las Vegas Sands has to work with.

    Zone One:The US ,and Canada have 3,384,000 millionaires with High Net Worth (LVS has casinos in Vegas, and Pennsylvania ) they speak English

    Zone Two : Japan,China,and South Korea have 2,528,000 millionaires with High Net Worth ( LVS has casinos in Macau, and Singapore ) Asian

    Zone Three:Germany,UK,France,

    Switzerland, and,Italy have 1,964,000 millionaires with High Net Worth ( LVS will have an Integrated Resort in Spain ) European

    The number of High Net Worth Individuals in the world.

    1) US 3,104,000

    2) Japan 1,822,000

    3) Germany 951,000

    4) China 562,000

    5) UK 441,000

    6) France 404,000

    7) Canada 280,000

    8)Switzerland 252,000

    9) Australia 180,000

    10) Italy 168,000

    11) Brazil 165,000

    12) South Korea 144,000

    Adelson has 60% of the market in Singapore going to 70% with no competition for ever ( I know what you will say but Singapore is happy with Adelson and they spent 10 billion dollars to help just him) They do not want another operator.

    Adelson will have 40% of the market in Macau with very little ease of entry for any competitors.

    Adelson will have over 80% of Europe with no ease of entry for anyone. Spain will give him 2000 acres for free do you think they will do that for anyone else.

    Lets get all the millionaires to go to France. I know France will let us build one next to the Eiffel Tower they will give him 2000 acres for free.

    Lets get all the millionaires to go to England. The Queen will tear down Buckingham Palace and give it to Adelson for free and then he can put up the Marina Bay Sands and all the millionaires can go there. Oh wait the Queen wants a lot of taxes and Spain is the only one that will do low taxes.

    Adelson has another problem. He likes the fact that Spain already spent 60 billion dollars on the second largest high speed rail system in the world.

    Here is an idea lets get all the millionaires to go to Barcelona and bask in the warm mediterranean breeze by day and gamble at night because it will be the biggest attraction in the world and a must see place for middle class and upper class and millionaires to go.

    Mr Adelson will build in Spain and make 10's of billions of dollars while all the other operators turn blue waitng to go into the next Macau.

  • Report this Comment On July 22, 2012, at 8:07 AM, cp757 wrote:

    Sorry this is a clarification of the number of vehicals on the road in the US and China. In 2012 China will sell 19 million vehicals and the United States will sell 14 million. The total number of vehicals on the road in the United States is 239 million. China saw its number of motor vehicles on the road hit 233 million at the end of June 2012 according to the latest statistics from the Ministry of Public Security.

  • Report this Comment On July 22, 2012, at 5:21 PM, spokanimal wrote:

    Austin,

    I see you're a young, whippersnapper, reacting to headlines...

    ... and trying to make a few headlines of your own.

    Bear in mind that the bribery issue was born out of sour grapes from a fired executive and has not only been dismissed by the Hong Kong SEC authority, but by Chief Executive Sieu in Macau as well. Both of those completed probes will be considered as the U.S. SEC completes their own.

    Re: China... It's slowing GDP (historic info) is accompanied by growing credit demand, expanding money supply, monetary easing, accelerated project approvals and a fledgling turn-around in housing (all of which are leading indicators of china's economy.

    Before you make amateuristic summations on economic conditions in China, you need to broaden your horizons and actually STUDY chinese economics a bit, son.

    Spokanimal

  • Report this Comment On July 23, 2012, at 6:04 AM, TedKane wrote:

    Motley Fool is the LAST place on earth that I would look for advice!

    They were long Steel last year and love BAC at $8.00.

    They're almost as bad as Street Smart!

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