Las Vegas Sands Still Dominating on Cotai Strip

Results may not have hit Wall Street's expectations, but Las Vegas Sands is still gaining share on the Cotai Strip in Macau.

Jul 17, 2014 at 4:40PM

It seems like every time Las Vegas Sands (NYSE:LVS) reports good earnings in one part of the world, there's also a red flag in another. That was the case in the second quarter when Macau performed fairly well, even if it didn't meet Wall Street's expectations, but Singapore saw a massive drop in demand.

Macau continues to outperform
When looking at Las Vegas Sands' performance in Macau, it's important to keep the entire market in perspective. In the second quarter, gaming revenue in Macau was up 5.5% from a year ago but down 11.1% sequentially, so Las Vegas Sands' casinos need to be taken in that context.

The Venetian Macau continues to perform well; it grew revenue 15.4% to $1.03 billion and EBITDA 11.4% to $402.1 million in the quarter. A 40.2% jump in mass market play drove the results.

Lvs Sands Macau Gaming Area Image

Gaming floors in Macau are still packed with gamblers. Source: Las Vegas Sands.

Similarly, Sands Cotai Central saw revenue rise 34.4% to $784.8 million and EBITDA jump 70.4% to $249.0 million on the back of a 53.2% increase in mass-market play. Clearly, both of these resorts took share in the quarter, largely because they're in the center of the Cotai Strip, which is where the mass market is going.

Four Seasons Macau and Sands Macau were a bit more of a mixed bag. Four Seasons' revenue was down 16.6% due to a 43.2% drop in VIP play and Sands Macau's revenue was up just 6.2% because of a 20.1% drop in VIP play. In both cases, mass-market play was up.

The trend of revenue heading to Cotai is consistent with what we've seen for years, and Four Seasons Macau will often be very volatile. What this means for competitors like Wynn Resorts (NASDAQ:WYNN) and Melco Crown (NASDAQ:MPEL) is that we'll likely see Wynn's revenue fall and Melco's rise. Wynn is highly reliant on VIP players and is on the Macau Peninsula until its Cotai resort is completed; Melco Crown is a neighbor of The Venetian Macau and Sands Cotai Central, so it'll likely benefit from mass market trends.

Macau is still about location and Las Vegas Sands is winning that battle, even if results fell short of analysts' lofty expectations.

Lvs Singapore

Marina Bay Sands is an icon of Singapore's skyline. Source: Las Vegas Sands.

Singapore gets lucky
Results from Marina Bay Sands, which is one of only two casinos in Singapore, were also a bit mixed. Revenue was up 8.8% and EBITDA rose 17.6% to $417.8 million, but VIP play was down 27.3% and mass market play fell 4.9%. For results to rise, Las Vegas Sands had to have a very lucky quarter, particularly from VIP players.

On the conference call, Sheldon Adelson said one of the reasons VIP play was down is that they're giving less incentives, particularly credit, to customers. That'll make the revenue they do generate higher-margin but will also hurt the top line. But we've also seen occupancy exceed 99% in Singapore again and room rates at $409, so the resort is still in very high demand.

We've seen that Singapore's gaming play can swing wildly quarter to quarter, and so can luck, but long-term the resort should generate $1.5 billion to $2.0 billion in EBITDA annually. That's great profit, but I also wouldn't expect the same kind of growth there that Las Vegas Sands might see in Singapore.

Outperforming but still expensive
Las Vegas Sands is clearly taking share in Macau, as it should right now. That will likely change when new resorts from Wynn Resorts, Melco Crown, and others open in 2016 along with The Parisian for Las Vegas Sands. Until then, it's the best show in town.

The problem I have jumping into shares today is simply valuation. Las Vegas Sands' enterprise value is 12.7 times its EBITDA, and with Macau's growth slowing and Singapore flat, that's a high price to pay. If shares fall to an EV/EBITDA multiple below 10 I'll be interested, but until then I'll stay out of the stock, despite great operating results.

More dividends for your portfolio 
Las Vegas Sands is now yielding 2.7% and the smartest investors know that dividend stocks like this simply crush their non-dividend-paying counterparts over the long term. That's beyond dispute. They also know that a well-constructed dividend portfolio creates wealth steadily, while still allowing you to sleep like a baby. Knowing how valuable such a portfolio might be, our top analysts put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.

Travis Hoium manages an account that owns shares of Wynn Resorts, Limited. The Motley Fool has no position in any of the stocks mentioned. 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.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers