Singapore resort keeps Las Vegas Sands afloat as Macau continues to crater – The Nevada Independent
In the short term, Las Vegas Sands is one casino company.
Sands sold its Las Vegas holdings in February and its Macau casinos are operating at around 50% after a two-week shutdown linked to rising COVID-19 infections. The company depends on Marina Bay Sands in Singapore for the majority of its revenue and cash flow.
Last week, Las Vegas Sands said Singapore’s Marina Bay Sands second-quarter results included $319 million in cash flow while revenue jumped 107.6% to $679 million. However, the company suffered a net loss of $414 million as Macau revenue fell 56.7% to $367 million.
“Investor appetite for Macau names remains zero, which we believe creates an interesting setup,” Stifel Financial gaming analyst Stephen Wieczynski told investors in a research note following the announcement. Las Vegas Sands quarterly results.
“No one has any idea how much longer China will continue on this path of finding zero COVID cases,” Wieczynski said. “It could last another year for all we know.”
Singapore, however, eased much of its COVID-19 restrictions in the spring, which has accelerated activity at Marina Bay Sands, one of the island nation’s two casinos.
“We expected Singapore’s recovery to gain momentum in the second quarter, but the recovery in gaming revenue at Marina Bay Sands was much better than expected,” wrote John DeCree, gaming analyst at CBRE. “We still see plenty of room for a new recovery at Marina Bay Sands.”
Las Vegas Sands plans announced in 2019 spending $3.3 billion for Marina Bay Sands in a non-gaming expansion that would include a 15,000-seat arena, 1,000-room hotel and additional convention space.
The pandemic slowed the schedule of plans, then the death company founder and largest shareholder Sheldon Adelson, as well as the $6.25 billion sale of the Venetian, Palazzo and Venetian Expo, have company executives concerned.
In a conference call with analysts a week ago, Sands Chairman and CEO Rob Goldstein said the company would initially spend $1 billion of the capital investment budget on new sequels. hotel and other facilities.
Goldstein said additional features will be developed this year and through 2023.
“We look forward to significantly increasing our investment in the Singapore market as we execute our expansion plans at Marina Bay Sands in the years to come,” Goldstein said in prepared remarks at the start of the call. “Singapore remains in an exceptional market for further investment.”
Analysts said Singapore was in the early stages of its recovery. Passenger volume at Changi Airport was less than half of pre-pandemic levels in June. However, DeCree believes Singapore will benefit from Macau’s troubles.
“The depth of the local market is evident, and with Macau largely still closed, Singapore remains a key beneficiary of gaming customers displaced into regional Asian markets,” DeCree said.
Much of Singapore’s current international visits come from closer markets, including Indonesia and Malaysia.
Unlike Macau, where the zero-COVID policy leads to restrictive quarantine rules, travel restrictions and business closures, Singapore has introduced a “Vaccinated Travel Framework”, which is part of the city-state strategy. of “Living with Covid”.
JP Morgan gaming analyst Joe Greff said the plans are working in favor of Las Vegas Sands given the uncertainty in Macau.
“At current levels, Singapore operations represent 55% of Las Vegas Sands market capitalization,” Greff said. “Our feeling is that when we point this out to investors, they’re surprised it’s so high.”
Analysts have all but written off Macau, despite the limited reopening over the weekend.
For the first six months of 2022, Macau’s gaming revenue is $3.26 billion, down 46.4% from a year ago, when Macau’s casinos collected $10.8 billion. of dollars. In 2019 before the pandemic, casinos in Macau generated $36.6 billion.
“We could see a scenario in which China slowly begins to relax its restrictive stance on COVID, which in turn should create a massive explosion of pent-up demand across China,” Wieczynski said in a research note.
He predicted that “the pent-up demand from the typical Chinese gambling consumer could be even higher than what has been seen in the United States over the past year and a half.”