Las Vegas Sands’ Profit Beats Estimates, Driving Up Shares

Las Vegas Sands Beats Estimates on Asia Casino Growth
An indoor gondola travels through the shopping mall of Las Vegas Sands Corp.'s Marina Bay Sands resort and casino, in Singapore. Photographer: Charles Pertwee/Bloomberg

Las Vegas Sands Corp., the U.S. casino company expanding in Asia, reported third-quarter earnings that topped analysts’ estimates after it opened a Singapore resort and benefited from Macau’s gambling growth.

Profit excluding some items was 34 cents a share, more than the 24-cent average of 21 analysts’ estimates compiled by Bloomberg. Hong Kong-listed unit Sands China Ltd. surged by a record 9 percent while the parent’s stock jumped 10 percent in New York extended trading.

Billionaire founder and Chief Executive Officer Sheldon Adelson, who loaned his company money two years ago to eliminate bankruptcy fears, opened the $5.5 billion Marina Bay Sands casino resort in Singapore in phases starting in April. Las Vegas Sands restarted its mothballed expansion in Macau, China, the world’s biggest casino center.

“Strong revenue growth and increases in operational efficiency in Macau and outstanding results at Marina Bay Sands in Singapore contributed to substantial margin expansion,” Adelson said in the statement. “We are confident that Marina Bay Sands will provide an ideal platform for strong growth and outstanding returns.”

Las Vegas Sands rose $4.19, or 10 percent, to $45.25 in extended trading after the earnings announcement. The shares gained 6 cents to $41.06 during regular New York Stock Exchange hours and have almost tripled this year.

Sands China Surges

Macau unit Sands China climbed by HK$1.32 to close at a record HK$16.30 at the 4 p.m. close of trading in Hong Kong. The gain is the biggest since the stock started trading in November. The benchmark Hang Seng Index rose 0.2 percent.

Sales jumped 67 percent to $1.91 billion, from $1.14 billion, the Las Vegas-based company said yesterday in a statement, surpassing analysts’ $1.79 billion average estimate.

Cash flow, measured as adjusted property earnings before interest, taxes, depreciation and amortization, more than doubled to $645.2 million, beating analysts’ projections of $530 million. Singapore cash flow was $241.6 million, and Macau cash flow gained 41 percent to $334.6 million. Macau, the only place in China where casinos are legal, saw total gambling revenue surge 60 percent in the nine months through September.

Companywide Ebitda will be “substantially in excess” of the $3 billion Adelson earlier forecast for 2011, he said on a conference call. Singapore Ebitda alone may be as high as $2 billion in 2012, he said.

Singapore Retail

Sands China is “on pace for a record October,” after a “strong” Golden Week, a Chinese holiday this month, Adelson said on the call. The Macau-based company’s revenue increased 28 percent to $1.08 billion and adjusted property Ebitda gained 43 percent on a record result at its Four Seasons Hotel Macao and Plaza Casino.

“Better performance from Four Seasons and stringent cost control underpins the rapid earnings growth and margins,” Aaron Fischer, an analyst at CLSA Ltd., said in a note to clients today. Fischer affirmed his “buy” rating on Sands China.

The company may open all of the retail areas planned in Singapore by the end of 2011, Chief Operating Officer Mike Leven said on the call. Executives “don’t see any let up in growth” at the resort, and payroll is expected to increase to about 8,400 employees as planned, he said.

The quarterly net income of $214.5 million, or 21 cents a share, compared with a net loss of $76.5 million, or 19 cents, a year earlier, the company said.

Venetian, Palazzo

Las Vegas Sands’ Venetian and Palazzo resorts on the Las Vegas Strip reported Ebitda rose 69 percent to $58.3 million, as the casinos won more at the tables and filled more rooms. Las Vegas is emerging from a record two-year drop in corporate meetings and gambling.

Las Vegas Sands said this week that its Venetian and Palazzo casino resorts in Las Vegas will join InterContinental Hotels Group Plc’s database and loyalty program, gaining access to travelers who can help fill the properties’ 7,000 suites.

In August, Las Vegas Sands amended its U.S. loan to get more flexibility and delay maturities in exchange for a higher interest rate. The company also agreed to repay about $1 billion of the debt.

Sands China raised $2.5 billion last year in a Hong Kong initial public offering and convertible bond issue to repay loans and resume construction.

The company suspended projects in Macau, Las Vegas and Pennsylvania in November 2008, when the financial crisis froze funding and decimated casino company share prices, and while auditors questioned its solvency. Most of Sands’ building projects have since restarted.

Overall, Macau casino revenue in the first nine months advanced 60 percent to 133 billion patacas ($16.6 billion) from the same period last year, according to Macau’s Gaming Inspection and Coordination Bureau.

Las Vegas Strip gambling proceeds increased 4.5 percent to $3.81 billion in the first eight months of this year, data from Nevada’s Gaming Control Board show.

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