Las Vegas Sands executives said Wednesday during the company’s third quarter conference call that they haven’t seen any fallout from the ongoing trade war and political tensions between the U.S. and China.
Otherwise, said Las Vegas Sands President Rob Goldstein, the casino giant wouldn’t be spending more than $2 billion over the next few years to expand and remodel its Macau properties, including transforming the Sands Cotai Central into the Londoner Macau.
Goldstein told analysts that the casino operator wasn’t concerned about the upcoming relicensing process with Macau, a Special Administrative Region of China. The process is expected to begin in the next few years. He said the company hasn’t yet spoken with government officials about the concession renewal.
“We’re reinvesting in (the) firm belief that we’re going to be there today, tomorrow and (for) years to come,” Goldstein said. “We’ve run our business properly and we’ve been doing what we are told to do, which is to build nongaming assets.”
Goldstein cited 13,000 hotel rooms, 2 million square feet of retail, convention facilities and a sports arena at the Venetian Macau that have been constructed over the years.
“Our business is stable and strong, and there will never be another market like Macau,” he said.
Las Vegas Sands’ Macau holdings grew revenues more than 13 percent in the three-month period ending Sept. 30, fueling a 15 percent increase in cash flow and off-setting revenue declines at the company’s casinos in Las Vegas and Singapore.
For the quarter, Las Vegas Sands said revenue companywide grew 6.7 percent to $3.37 billion. Of the total, $2.15 billion in revenue – 64 percent – came from Macau. The company’s net income rose 2.2 percent to $699 million, and its earnings per share grew 1.4 percent to 73 cents.
“Not only were the results better than we believe some investors were fearing, but management’s tone around current Macau business trends could not have been more encouraging, in our view,” said Stifel analyst Steven Wieczynski.
However, Credit Suisse gaming analyst Cameron McKnight told investors after the conference call that Las Vegas Sands’ high-end business in Macau was strong, while mass market revenues were “lighter than expected.”
Seeking Alpha noted that Las Vegas Sands earnings missed analyst projections by 4 cents and that the company’s revenue was off by $40 million.
The Macau numbers reflected the only positive market for Las Vegas Sands in the quarter. Las Vegas revenues fell 2.1 percent, Marina Bay Sands in Singapore was off 2.9 percent and the Sands Bethlehem in Pennsylvania, which is in the process of being sold, saw revenues decline 4.2 percent.
Las Vegas Sands Chairman and CEO Sheldon Adelson said the company showed its commitment to Macau early-on, spending $13 billion to $14 billion to develop the market, which doesn’t include all the maintenance spending the company has done to add new amenities.
“We remain supremely confident in the future opportunity in Macau and have therefore elected to meaningfully increase the scale of our investments,” Adelson said.
Earlier this week, Chicago-based investment research and management firm Morningstar pegged Las Vegas Sands as one of two companies, along with MGM Resorts International, most likely to earn one of the three gaming licenses in Japan.
Morningstar analyst Dan Wasiolek told investors Las Vegas Sands could win a bid for either Osaka or Yokohama.
“We see Las Vegas Sands as most likely to win one of the two urban gaming licenses, due to its strong resort experience in Singapore and Las Vegas, where we believe regulation is more stringent than in Macau and the Philippines, and where problem gambling and crime issues have been controlled,” Wasiolek said in the report.
Adelson has said the company would invest up to $10 billion into a Japan integrated resort.
“Everybody in the industry believes that if anybody is going to be successful there, it’s going to be us,” Adelson said. “Our competitors want to share with us. I don’t know if I want to share with them.”
Goldstein said the company “was in the hunt” in Japan, but there “was not much more to talk about.”
Shares in Las Vegas Sands have been hit on two fronts over the past few months. Reduced expectations for third quarter results in Las Vegas depressed much of the gaming sector, and results were lower than expected in Macau due to Typhoon Mangkhut in September and a slower-than-expected Golden Week in October.
Over the last 52-week period, Las Vegas Sands shares are down 14.87 percent. On Wednesday, the stock closed at $52 on the New York Stock Exchange, down $1.37, or 2.57 percent. Further, over the last 12 months, Las Vegas Sands’ debt has increased from $10.1 billion to almost $12 billion.
Analysts did not ask about the Nov. 6 midterm elections and the Adelson family financial donations – which have topped more than $100 million in this cycle – to bolster the Republican Party’s efforts.
Bloomberg News reported this week that Adelson and his wife Miriam contributed $25 million to the Senate Leadership Fund, a super political action committee affiliated with Senate Majority Leader Mitch McConnell, Federal Election Commission filings show.
The Adelsons have already surpassed the $82.5 million they gave to conservative causes and candidates in the 2015-16 election cycle, according to the Center for Responsive Politics. For that cycle, the couple ranked second in the U.S. for individual donors, behind liberal billionaire Tom Steyer.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
