The death on Monday of Sheldon Adelson, founding chairman and chief executive of casino operator Las Vegas Sands Corp (LVS), and the elevation days before, of Rob Goldstein as acting chairman and CEO, “should not give investors alarm,” said a Wednesday note from brokerage Sanford C. Bernstein Ltd.
“We expect Las Vegas Sands to not have any material change in strategy. The focus remains developing Macau and Singapore,” said analysts Vitaly Umansky, Kelsey Zhu and Tianjiao Yu.
The casino group’s investments in those two Asian markets have still been outperforming in revenue terms the firm’s venues in Las Vegas, Nevada, even during the pandemic.
In Macau, the group operates via Hong Kong-listed Sands China Ltd.
In Singapore, a group unit called Marina Bay Sands Pte Ltd runs its Marina Bay Sands venue (pictured) under that city-state’s casino duopoly. There, the group has given a commitment to the government to make a fresh SGD4.5 billion (US$3.4 billion) investment in Marina Bay Sands, announced in 2019, at the same time its local casino rights were extended to 2030.
Sanford Bernstein noted the Adelson family currently held a 56.6 percent controlling interest in Las Vegas Sands.
“Sheldon Adelson’s direct ownership is under 9 percent,” stated Sanford Bernstein.
“We do not believe there are any major estate tax issues that would force sale of… Las Vegas Sands stock and we do not expect the family to reduce ownership,” added the brokerage’s analysts.
Patrick Dumont – a son-in-law of Mr Adelson, and chief financial officer of the group – would “remain the key management and board figure representing the interests of the family”.
Mr Goldstein, president and chief operating officer for more than four years previously – had been with the Sands brand “since 1995”, said the brokerage, and would stay in day-to-day charge, while in likelihood preparing Mr Dumont for a larger role.
Mr Goldstein was “well known and largely accepted by the investor community and is well-known to Macau and Singapore authorities,” stated Sanford Bernstein.
The institution added: “While Miriam Adelson, Sheldon Adelson’s wife, has a continued informal role to play, we do not expect her to take any official role with Sands.”
Dividends again maybe 2022
There were also strong Sands group management teams in place in Macau and Singapore, said the Sanford Bernstein analysts.
“With the Covid[-19] crisis slowly receding in 2021 with vaccination and resumption of travel, we expect, in 2022, Sands China and Las Vegas Sands to begin paying dividends again,” they added.
“Prior discussions around the sale” of the group’s Las Vegas properties, the Venetian and the Palazzo, possibly for US$6 billion, “may eventually come to fruition and if such divestiture occurs, we expect Las Vegas Sands to focus on investment of proceeds in high return-on-investment potential opportunities in Asia, or return capital to investors, and pay down some debt,” wrote Mr Umansky and his colleagues.
“We see price as the only stumbling block” for such a sale, added the brokerage.
Sanford Bernstein observed that even though Las Vegas Sands had dropped for the time being its pursuit of a Japan casino scheme, “due to concerns around return on investment and regulatory structure,” the company strategy was still “focused on development opportunities that may make sense”.
Possible casino projects in the U.S. state of Texas and New York City would only be pursued if “return on investment makes sense, and is materially above cost of capital,” as well as being “value creating”.
The brokerage additionally observed that while Mr Adelson had been “a big opponent” of online gaming, “we do not see Goldstein and Dumont as having a similar strong view”.
Sanford Bernstein noted: “We believe Las Vegas Sands is evaluating the market opportunity and whether its involvement makes economic sense, again with a focus on return on investment.”
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Apr 16, 2021
Tax revenue collected by the Macau government from the city’s gaming industry in the first three months of 2021