GGRAsia – Las Vegas Sands to post 2Q EBITDA up 29 pct: Telsey

Las Vegas Sands to post 2Q EBITDA up 29 pct: Telsey

Jul 15, 2014 Newsdesk Latest News, Macau, Singapore, Top of the deck

U.S.-based Telsey Advisory Group said in a report on Monday it thinks Las Vegas Sands Corp’s global second quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) could rise by 29 percent year-on-year, on close to 19 percent net revenue growth.

Las Vegas Sands is scheduled to start the second quarter earnings seasons for the large-cap gaming sector on Wednesday at 1.30pm Pacific Time in the United States.

The broker says performance is likely to be driven in part by a 79 percent hike in EBITDA at Sands Cotai Central (pictured) property in Macau – to US$262 million – compared to a year earlier. Telsey expects the property to report a near 43 percent gain in revenue and a 650 basis points improvement in margin.

“Cotai Central posted a 7.9 percent gain in VIP win in the quarter despite a 12.7 percent decline in volume as the property benefitted from a relatively easy hold comp,” wrote the report authors, led by Christopher Jones.

Telsey adds that it believes group-wide the firm’s margin could improve by nearly 300 basis points over the prior year period, “driven in large part by a greater contribution of mass-market revenues” in Macau.

The broker estimates EBITDA at the Venetian Macao to come in at US$405 million, up 12.1 percent from the prior year period.

“Venetian Macao was one of only a few properties to post gains in the VIP segment this quarter, up about 8.0 percent year-on-year, including a 6.4 percent gain in rolling chip volume and a modest improvement in hold compared with the prior year period,” said the analysts.

They added that mass-market revenues at the Venetian Macao were likely to be up around 23.5 percent year-on-year for the second quarter, but that this represented “a notable deceleration” from the circa 40 percent growth rates seen in each of the prior two quarters.

Telsey said in a commentary on the firm’s Singapore business that it expected Marina Bay Sands (MBS) to report US$400 million EBITDA on US$800 million of net revenue, i.e. a property EBTIDA margin of 50 percent.

“MBS estimates are always tricky with little intra-quarter insight and an ever volatile hold rate. However, after a streak of unfortunate luck, the Singapore casino held 3.41 percent last [first] quarter, reassuring the Street that there are no structural issues with the VIP business,” stated Telsey.

Trefis.com, an online company research business founded by Massachusetts Institute of Technology engineers and former Wall Street analysts, said in an article carried by Forbes that tourist numbers to Singapore had declined in the first four months of the year.

“While the data for visitors in the second quarter is not available yet, the international visitation declined by 0.2 percent during the first four months of 2014, according to the data released by Singapore Tourism Board. Singapore is the second biggest market for Las Vegas Sands after Macau, and constitutes roughly 20 percent of its value according to our estimates,” stated Trefis.