LVS—stock research paper
Their huge bet on Macau, which is one of just two Chinese cities where gambling is legal, is paying off. It’s where China’s booming middle class goes to spend their money. LVS now has three properties there: The Sands Macau, Venetian Macau and the Four Seasons Macau.
In the first quarter, Sands' casinos had an EBITDA margin of 33.4%, besting Wynn at 31.5% and miles ahead of Melco Crown at 15%. Include Marina Bay Sands in the mix, and the picture gets better. Singapore's low tax rate and packed casino resulted in an astonishing 48.6% EBITDA margin at Marina Bay Sands in the first quarter.
In the first 65 days of operation, the Singapore property contributed $94.5 million in adjusted earnings before interest, taxes, depreciation and amortization.
Seventy-five percent of Las Vegas Sands’ business comes from outside of the US, but the casino operator has two properties in Vegas—the Venetian and the Palazzo—and another in Pennsylvania; the Sands Bethlehem.
The company raised $3 billion from its initial public offering of Sands China in November 2009, and, on Aug. 18, LVS announced it would pay down $1 billion in debt and amend its $3.9 billion credit facility, so loans aren’t due until 2015 and 2016. That way, the company won’t spend as much on interest payments and the savings go to the bottom line.
Las Vegas Sands is currently selling for 27 times next year’s earnings versus Wynn Resorts which is trading at 39 times next year’s earnings. Compared to Wynn, LVS has more exposure to Macau and Singapore and more room to clean up its balance sheet.