GGRAsia – LVS 3Q profit down 7pct, stays upbeat on Macau outlook

LVS 3Q profit down 7pct, stays upbeat on Macau outlook

Oct 24, 2019 Newsdesk Latest News, Macau, Singapore, Top of the deck, World

Third-quarter net income attributable to shareholders of United States-based casino operator Las Vegas Sands Corp was down 6.7 percent year on year. Such net income for the three months to September 30 was US$533 million, compared to US$571 million in the prior-year quarter.

Group-wide net revenue stood at US$3.25 billion, down 3.6 percent from a year earlier, said Las Vegas Sands in a press release on Wednesday.

The firm is parent to Macau casino operator Sands China Ltd, and also to Marina Bay Sands Pte Ltd, the operator of the Marina Bay Sands casino resort in Singapore. It also runs operations in Las Vegas, Nevada, in the United States.

In the third quarter, Sands China’s net revenue was almost flat year-on-year, down 1.9 percent, at US$2.11 billion, compared to US$2.15 billion in the same quarter of 2018. Net income for the period remained flat at US$454 million, said the parent firm.

The overall Macau market has so far this year seen a mild year-on-year contraction in casino gross gaming revenue (GGR), driven by a significant dip in VIP rolling volume and VIP GGR. But Macau-market mass GGR including slots – which Las Vegas Sands describes as its strength – has had significant expansion.

At Marina Bay Sands, net revenues rose 3.5 percent year-on-year, to US$793 million, compared to US$766 million a year earlier.

Las Vegas Sands’ chairman and chief executive Sheldon Adelson said in remarks accompanying the press release that the group had delivered “solid financial results” in the reporting quarter.

Mr Adelson said the group remained “enthusiastic” about its growth opportunities in Asia.

Mr Adelson noted in his comments, referring to the Macau market: “Next year, we will introduce approximately 2 million square feet [185,806 sq metres] of luxurious suite accommodations on the Cotai Strip with the opening of the Grand Suites at Four Seasons Macao and The Londoner Tower Suites. Additional tourism and entertainment amenities of The Londoner Macao will debut throughout 2020 and 2021.”

The latter was a reference to a conversion of Sands Cotai Central to a property themed on architecture from the United Kingdom’s capital city.

The group paid a recurring dividend of US$0.77 per common share, an increase of 2.7 percent on the US$0.75 per share paid in the third quarter a year earlier.

The board also announced a US$0.08 Increase in the company’s recurring common stock dividend for the 2020 calendar year.

Asia performance

In the third quarter, adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) for Macau operations was flat at US$755 million, compared to US$754 million in the prior-year period.

At Marina Bay Sands, such adjusted quarterly property EBITDA was up 3.8 percent, at US$435 million, compared to US$419 million the year before.

In Macau, rolling chip volume at the Venetian Macao (pictured) was down 20.6 percent year-on-year in the third quarter. Such roll was US$5.89 billion, compared to just under US$7.43 billion a year earlier.

A Thursday note from JP Morgan Securities (Asia-Pacific) Ltd described Sands China’s Macau-wide quarterly VIP performance as “dismal”.

Analysts DS Kim, Jeremy An and Derek Choi wrote: “Its VIP GGR fell 22 percent quarter-on-quarter and 36 percent year-on-year, with big declines in rolling volumes (-11 percent quarter-on-quarter, -30 percent year-on-year).”

But the institution added: “The good news is that this segment doesn’t really move the needle for Sands [China] anyway, as VIP (including direct) accounts for only 7 to 8 percent of its EBITDA.”

Andrew Lee and Lois Zhou of Jeffries Group LLC noted in a Wednesday memo that there had been “ongoing VIP weakness with rebound uncertainty, and Sands Cotai Central renovations impacting earnings”.

But the Jeffries analysts added there had been a “positive” in the premium mass segment, which had “recovered from second-quarter 2019 weakness with management shifting more tables from base mass”.

During the reporting period, non-rolling chip drop at the Venetian Macao was up 7.6 percent year-on-year, at US$2.34 billion, compared to just under US$2.18 billion a year earlier.

Slot handle at the Venetian Macao leapt 23.4 percent year-on-year, to US$996 million, from US$807 million.

The trend was similar in the other Macau properties operated by Sands China, with rolling chip volume at the Parisian Macao down 24.8 percent, but its non-rolling chip drop up 7.3 percent from the prior-year period.

At Marina Bay Sands, third-quarter rolling chip volume was up 2.4 percent year-on-year, at just under US$7.27 billion, compared to US$7.09 billion in the prior-year period.

Non-rolling chip drop there was up 4.6 percent judged annually, at US$1.42 billion, compared to nearly US$1.36 billion in the third quarter of 2018.

Slot handle at Marina Bay Sands was down 3.7 percent year-on-year, at US$3.49 billion, compared to just over US$3.62 billion a year earlier.

A filing by Sands China to the Hong Kong Stock Exchange gave some comments by CEO Mr Adelson from the group’s earnings call.

He noted: “We remain steadfast in our belief that Macau is the best market in the world with respect to the continued deployment of our capital.”