Las Vegas Sands Corp. (NYSE:LVS)' stock is on fire today, up 5.4% after the company's reported fourth-quarter results showed improvement in Macau and Singapore. Investors are overlooking the $0.05 earnings miss when the company reported earnings of $0.54 per share and are instead looking at the 20.9% increase in revenue to $3.08 billion.
Let's take a look at how the company did location by location.
What's going on in Macau Last year in Macau we saw a clear trend of slower VIP play and continued growth in mass-market play. This makes sense because infrastructure is improving in Macau and as the middle class grows, the gaming base will grow as well.
Now we're starting to see Las Vegas Sands' strategy of focusing on this mass market and Cotai Strip beginning to pay off. The company had a 21.1% market share in the quarter, greatly improved from 15.5% a year ago because of Sands Cotai Central. But this compares to 18% in the VIP market. Since VIP play is still nearly 70% of Macau's gaming, that means Las Vegas Sands is taking a very large share of mass play.
So, that's the broad overview; here are the detailed results. Below I have given the EBITDA at Las Vegas Sands' four casinos and the year-over-year growth.
|Casino||Q4 2011||Q3 2012||Q4 2012||Y/Y Growth|
|Venetian Macau||$283.3 million||$299.0 million||$333.1 million||17.6%|
|Four Seasons Macau||$63.0 million||$54.4 million||$89.7 million||42.4%|
|Cotai Central||N/A||$53.7 million||$108.0 million||N/A|
|Sands Macau||$87.8 million||$80.9 million||$91.5 million||4.2%|
When we compare growth to the 9.9% gaming growth Macau experienced year over year, you can see that the Venetian Macau and Four Seasons performed very well. Sands Macau, on the other hand, did not.
This continues a trend of gaming dollars moving from the Macau Peninsula to Cotai, where new construction is focused. I would expect this trend to be a drag on results for MGM Resorts International (NYSE:MGM) and Wynn Resorts, Limited (NASDAQ:WYNN) because their only exposure is to the Macau Peninsula. On the flip side, Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) is Las Vegas Sands' neighbor on Cotai and has performed extremely well after Cotai Central began opening. The trends at these three companies will be worth watching as earnings continue to come out.
What is interesting in the Macau results is the relative weakness in Cotai Central. The resort isn't completely open so it's tough to completely judge it, but in the past I've estimated $1.0 billion in EBITDA from the complex given the number of rooms and table games. Right now, that seems like it could be a long ways off.
Overall, great numbers from existing Macau casinos and somewhat disappointing, but not disastrous, numbers from Cotai Central.
New normal in Singapore Marina Bay Sands reported another disappointing quarter. Overall, revenue dropped 11.1% from a year ago and EBITDA fell 29.1% to $302.5 million. CEO Sheldon Adelson said the EBITDA figure would have been $406 million if it weren't for bad luck, but if it weren't for good luck, the Macau numbers would have been worse -- so you can take luck for what it's worth in both Macau and Singapore.