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    Las Vegas Sands Corp (LVS)

    Q3 2024 Earnings Summary

    Reported on Jan 6, 2025 (After Market Close)
    Pre-Earnings Price$51.04Last close (Oct 23, 2024)
    Post-Earnings Price$52.15Open (Oct 24, 2024)
    Price Change
    $1.11(+2.17%)

    What went well

    • Strong Performance and Growth Potential at Marina Bay Sands, with an Average Daily Rate (ADR) of $900 reflecting the high quality of newly renovated rooms, and expectations for ADR to grow further as the IR2 expansion, including a new arena and additional amenities, opens by the middle of next year . The company is confident that the IR2 will drive significant tourism and revenue growth, capitalizing on the duopoly market and stable regulatory environment with high barriers to entry , anticipating IR1 to reach $2.5 billion in EBITDA and IR2 to add over $1 billion in EBITDA .
    • Macao Operations Showing Resilience and Growth, with double-digit growth in gaming revenue despite economic challenges in China, driven by the premium mass segment . Executives anticipate further improvement as base mass recovers, which will significantly enhance earnings, aiming for the Londoner and Venetian each to generate over $1 billion in EBITDA . The company is efficiently managing margins and costs , positioning itself to benefit from any economic stimulus in China .
    • Effective Capital Allocation Strategy, including share buybacks of Sands China Ltd. (SCL) stock, with hopes for SCL to resume dividends in the upcoming year , enhancing return of capital to shareholders. The company plans to finance growth projects like IR2 with cost-efficient debt, maintaining investment-grade ratings, and balancing investment in high-growth opportunities with capital returns to investors .

    What went wrong

    • Ongoing construction disruptions in Macao, particularly at the Londoner property, are reducing room availability and impacting EBITDA and margins, with full recovery not expected until mid-2025.
    • The base mass market segment in Macao has not recovered to pre-pandemic levels, which is essential for LVS to return to higher margins and revenue growth. This lack of recovery continues to impact financial performance.
    • Uncertainty around the potential impact of online gambling legalization in markets like New York is causing LVS to reevaluate capital investment decisions, potentially affecting future growth opportunities.

    Q&A Summary

    1. Singapore Expansion and Returns
      Q: Any updates on Marina Bay Sands IR2 scope and returns?
      A: The scope has expanded to include a full-fledged casino, not just a hotel supporting IR1, significantly enhancing the project's potential. We are confident about the returns, expecting IR1 to reach $2.5 billion in EBITDA and believe the new building can add over $1 billion on top of that. The market is growing, with gaming revenue projected to be around $6.5 billion in 2024 and potentially reaching $11 billion by quarter-end.

    2. Macau's Premium Mass Resilience
      Q: Is China's luxury spend slowdown affecting Macau's premium mass segment?
      A: Despite pressures on luxury spending in China, Macau's gaming market remains resilient, showing double-digit growth in the quarter. Unlike retail, which has struggled, our premium mass segment continues to perform well. We are seeing strong growth and are encouraged by the market's performance.

    3. Base Mass Recovery and Stimulus Impact
      Q: Will Chinese stimulus speed up Macau's base mass recovery?
      A: It's too early to predict the impact of recent Chinese stimulus measures on base mass recovery. However, any economic tailwinds should benefit segments like base mass and retail over time. We are optimistic but cautious, monitoring how these measures unfold.

    4. Marina Bay Sands Disruptions Ending
      Q: When will renovations at Marina Bay Sands conclude?
      A: Major disruptions should subside by mid-2025, with both Londoner and Singapore operating without significant construction. By the end of this quarter, we aim to add another 150 rooms, and by the middle of next year, we expect to stop discussing disruptions.

    5. Macau EBITDA Growth Prospects
      Q: What are EBITDA expectations post-Londoner and Venetian completions?
      A: We anticipate both the Londoner and Venetian to be dominant players in the market, each targeting over $1 billion in EBITDA. The real upside will come as base mass visitation recovers, potentially returning us to over $3 billion in EBITDA in Macau.

    6. Sands China Capital Allocation
      Q: Plans for capital allocation at Sands China?
      A: We are hopeful that Sands China will resume paying dividends in the upcoming year. Repaying the intercompany note to the parent company is also a possibility, providing capital allocation flexibility for share repurchases. We believe there's significant value in Sands China's equity.

    7. Online Gambling Impact on Investments
      Q: How does online gambling affect your view on new investments?
      A: The growth of online gambling makes us cautious about capital-intensive projects in markets where it's legalized. We need to understand the potential impact on land-based revenues before proceeding with investments like New York.

    8. Macau Visitation Trends
      Q: How did Macau visitation evolve this quarter?
      A: Visitation improved to about 93% of 2019 levels in the third quarter, with August exceeding 2019 levels. However, increased visitation didn't fully translate into spending in base mass and retail segments. The strength continues to be driven by the premium segments.

    9. Macau Arena Renovations
      Q: What's the status and impact of Macau arena renovations?
      A: The Venetian arena will relaunch towards the end of November into December. We have events lined up and anticipate that programming both the Venetian and Londoner arenas will drive traffic and spend.

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