CASINO STOCKS: LAS VEGAS VERSUS MACAU. WHAT’S THE BETTER BET?

by | Apr 22, 2024 | Gambling, Leisure

Las Vegas Sands Corporation is one of the most known gambling and hospitality companies in the US. It was founded in 1988 by Sheldon Adelson and trades on the New York Stock Exchange (NYSE: LVS). The company’s headquarters are in Paradise, Nevada, and gained its fame through its legendary Vegas casino properties like the Venetian resort on the Las Vegas Strip.

The COVID-19 pandemic impacted the company’s finances, causing a 97% drop in revenues in 2021. The financial difficulties, together with Sheldon Adelson’s death in 2021, resulted in Sands Corporation selling its Las Vegas properties. Since then, the company has been concentrating mainly on its properties in Asia, where it holds most of its properties through its Sands China subsidiary. Properties include Sands Macao, The Venetian Macao, The Londoner Macau, and The Parisian Macao. The gamble on Macau over Veges seemed to have worked, yielding the company revenues of $10.3 billion in 2023.

Casino: Just the facts

  • 2023 sales were 63% and 37% from Macau and Singapore casino properties, respectively.
  • The company now employs 38.700 employees around the world.
  • Total assets in 2023 were worth $21.7 billion.
  • Net income for the year was $1.2 billion.
  • Q1/24 earnings were $2.96 billion, up from $2.12 billion from Q1/23.
  • Revenues from Macau operations were $1.81 billion, short of the $1.94 billion predicted by analysts.

The drop in revenues from Macau operations comes mostly from the loss Sands is now incurring due to the disruption caused by the redevelopment of the Londoner. The property is now closed, as the company is redoing the 15.000 seat arena.

Las Vegas Sands

Ziv Chen, contributing author to thesolitaire, said: “Las Vegas Sands has five casino properties in Macau and one in Singapore, the Marina Bay Sands, which generated for the company revenues of $811.4 million in Q1/24, it’s a huge increase of 51.1% year-on-year. Why doesn’t that give the analysts as much confidence to drive the share price up? The lion’s share of Chinese risky exposure oversets benefits.”

Uncertainties in China impacting share price

Although the company didn’t miss its revenue targets by a large margin, some analysts are quoting “uncertainties in China” continue to taper wish shares, resulting in a larger impact on LVS’s stock price due to its large exposure to Macau. For example, Jefferies Equities Research lowered expected 2024 revenues from $12.2 to $11.9 billion, while J.P Morgan lowered the share price from $59 to $55.

Before the release of the results last week, the company’s share price was around $50.40. But as soon as the results were released, the share saw a large drop of 8% on Thursday’s trading at $46.23, and then closing on Friday, April 18, at $45.46, showing a total drop of more than 10%. It was the company’s largest drop in stock price during a single day since October 24, 2022, and according to Dow Jones market data, LSV was the worst performer of the S&P 500.

Top image of Marina Bay Sands: By shawnanggg/Unsplash

 

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