Las Vegas Sands Profit Surges on Continuing Macau Rebound

Updated on
  • Sands China earnings increased 20 percent, beating estimates
  • Operator reports gains from casual gamblers outpacing market
The Eiffel Tower attraction, a half-size replica of the Eiffel Tower in Paris, stands illuminated at the Parisian Macao casino resort, operated by Sands China Ltd., a unit of Las Vegas Sands Corp., in Macau.

Photographer: Anthony Kwan/Bloomberg

Las Vegas Sands Corp.’s big bet on Macau continues to pay off.

The world’s largest casino operator, which opened the $2.9 billion Parisian in the Chinese enclave in 2016, reported sales and profit Wednesday that beat Wall Street estimates. Its Macau unit, Sands China Ltd. reported earnings before interest taxes depreciation and amortization increased 20 percent to $731 million in the fourth quarter. That beat the median estimate of $718 million by seven analysts, compiled by Bloomberg News.

Sands, based in Las Vegas, has invested more than any other operator in the only place in China where casino gambling is legal. Billionaire founder Sheldon Adelson is planning to spend an additional $1.1 billion remodeling the Sands Cotai Central there.

“Our strategy to build integrated results towards scale and diversity is clearly paying dividends, as Macau’s mass and tourism growth accelerates,” said Adelson on a conference call. “I’m very optimistic and I’m very, very confident about the growth of Macau.” Adelson also said the company has received expressions of interest in Sands’ first resort in Macau, but has no plans to sell.

Comeback Trail

Gambling in Macau is recovering, but remains well below the 2013 annual high

Sources: Bloomberg Intelligence, Macau DICJ

billions of patacas

Still, there’s a margin of uncertainty in Macau as the territory plans to lay out the process for casino concession licenses this year. News that MGM Cotai, which opens on Jan. 29, was allotted 125 new gaming tables--fewer than the expected 150--sent some casino shares tumbling in Hong Kong.

Shares of MGM China Holdings Ltd. fell as much as 8 percent in early trading Thursday, the most in more than a year on an intraday basis. Despite its earnings beat, Sands China dropped as much 4.7 percent.

For now, Sands is focused on attracting casual players, tourists and families with property renovations. The London-themed remodel of the company’s Sands Cotai Central property will feature replicas of Big Ben, Parliament and Tower Bridge, Adelson said. Double-decker buses will carry guests around the area. And they’ll be able to get cash from faux telephone booths with ATMs inside.

The Macau casino market is bouncing back from a three-year slump, prompted by a government crackdown on corruption, though betting remains below the all-time high. Gamblers are being drawn back to market by a still-strong mainland economy and a string of new resorts designed to appeal to high-rollers as well as casual gamblers.

Table Wins

In Macau, the operator’s winnings at table games for recreational gamblers increased 27 percent -- the highest such win since 2014 and outpacing the growth in the overall market, according to the company.

Well-to-do players, below the free-spending VIPs, accounted for most of the growth in Macau, attracted by renovated rooms at Venetian and the Four Seasons, Morgan Stanley analysts led by Praveen K Choudhary said in a note Thursday. Still, the operator’s new Parisian, opened in 2016, reported weaker-than-expected earnings with some premium rooms under renovation, according to the note.

Profit in Sands’ hometown of Las Vegas rose despite a tourism slump tied to the Oct. 1 mass shooting and gained in Singapore as well.

For the fourth quarter, profit increased to 88 cents a share, excluding some items, Sands said in a statement. That beat analysts’ projections of 77 cents. Sales grew to $3.44 billion, beating estimates of $3.26 billion on strength of casino results in Macau and Singapore, where Sands is also the largest operator.

Shares of Las Vegas Sands rose as much as 4.4 percent to $80.82 in extended trading after results were announced. The stock fell 0.3 percent to $77.44 at the close in New York and rose 30 percent last year.

Earlier this week, Wynn Resorts Ltd. also reported quarterly results that beat Wall Street estimates and outlined plans to expand the $4.2 billion Wynn Palace on Macau’s Cotai Strip as well as plans for a new property in its hometown of Las Vegas.

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE