Saturday, February 13, 2010

Las Vegas Sands Corp. (NYSE: LVS): Q4 Earnings Preview 2009

Las Vegas Sands Corp. (NYSE: LVS) is scheduled to release its fiscal fourth-quarter 2009 financial results after the market close on Wednesday, February 17, 2010. Analysts, on average, expect the company to report earnings of 3 cents a share on revenue of $1.23 billion. In the year ago period, the company posted a loss of 4 cents per share on revenue of $1.09 billion.

Las Vegas Sands Corp. and its subsidiaries develop multi-use integrated resorts worldwide. It owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and The Sands Expo and Convention Center in Las Vegas, Nevada; and the Sands Macao, The Venetian Macao Resort Hotel, and the Four Seasons Hotel Macao, Cotai Strip in Macao, the People's Republic of China. The company is also developing Marina Bay Sands, an integrated resort in Singapore; and Sands Casino Resort Bethlehem, an integrated resort in Bethlehem, Pennsylvania. The company's Singapore project is expected to open in April 2010.

Like many gaming companies, the firm's casino operations has been hit hard by the recession, due to lower traffic, shorter stay and decreased spending by the visitors.In the preceding third quarter, the The Las Vegas, Nevada-based company reported a wider net loss of $123.0 million or $0.19 per share, compared to $32.2 million or $0.09 per share in the year-ago quarter. The company's adjusted net income increased to $20.1 million or $0.03 per share from $8.1 million or $0.02 per share in the third quarter of 2008. Revenue rose 3.2% to $1.14 billion from $1.11 billion in the prior-year quarter. Analysts, on average, expected the company to report a loss of $0.01 per share on revenue of $1.17 billion for the third quarter.

However, the financial outlook for Las Vegas Sands Corp. has improved amid a rebound in consumer spending and global economic revovery.

Recently, Nevada’s Gaming Control Board said that the Las Vegas Strip gambling revenue rose 5.9 percent in December, the second straight monthly gain. Strip proceeds climbed to $502.2 million in December from a year earlier.

The outlook for Macau is Sands' bright spot. Sand is poised to benefit from more friendly gaming policies from the local government, limited supply of new gaming tables in the near term, and expectation of no further stringent enforcement by the Chinese government over tourist visitations to the enclave support stable growth for the sector's revenues.According to Portuguese news agency Lusa, casino revenue in Macau jumped almost 65 percent to a monthly record of 14 billion patacas ($1.75 billion) in January from a year ago, beating the 12.6 billion patacas recorded for October 2009. A new daily record of more than 800 million patacas was also reached in January, Lusa said, citing data from the casino operators. Sands China holds the second largest market share in Macau and completion of the 6,000 room Cotai Strip project is expected to help create the “critical mass” needed to attract business conventions and tourists.

The casino operator has taken several steps to improve its liquidity and strengthen balance sheet. In the fourth quarter, Sands converted $600 million of exchangable bonds into equity, repaid off $500 million in debt for its Macau subsidiary. It also secured project financing commitments of $1.75 billion, which will be used to complete the first two phases of construction of the company's largest integrated resort on the Cotai Strip in Macau - featuring a combined 6,000 rooms and suites from the Shangri-La, Traders, and Sheraton hotel brands. Overall, it raised about US$5 billion of combined debt and equity financing from its fund-raising activities, which include the initial public offering of Sands China Ltd.

Sands successfully launched a Hong Kong IPO in the fourth quarter of 2009, through Sands China. 2010 is forecasted to be an iconic year for Sands, as they prepare to launch Marina Bay Sands Casino in Singapore in the second quarter of 2010. With the establishment in Singapore, LVS will experience a first-mover advantage in the sense that gambling was previously banned and that there are no other foreign competitors. It is worth mentioning that Singapore also has a higher GDP per capita than the United States, which would imply relatively high discretionary income. Asia is poised for massive growth and Sands is well positioned to benefit from it.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 57.97 and PEG Ratio (5 yr expected) of 2.45. In terms of stock performance, Sands shares have gained 383 percent over the past year.

Full Disclosure: None.

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