Las Vegas Sands tosses another $671m on its cash pile


las-vegas-sands-profitsCasino operator Las Vegas Sands reported a decent gain in Q3 profits despite a slight dip in its own revenue and the sustained declines experienced by the broader Macau casino market. Revenue for the three months ending Sept. 30 fell 1% to $3.53b but profit rose 7.2% to $671.7m. Sands chairman Sheldon Adelson – who uttered his ‘yay, dividends’ catchphrase three times during the analyst call – spread the wealth, announcing a 30% gain in the recurring common stock dividend and allocating a further $2b to Sands’ stock repurchase program.

Despite Macau’s highly publicized woes, Sands China revenue fell a mere 0.4% to $2.33b and profit rose 4.3% to $644.5m. Adelson credited the company’s strategy of focusing on the mass market and non-gaming sectors for helping it avoid the worst of Macau’s VIP gambling decline. Mass table win at Sands’ four Macau properties rose 14.8% to $1.22b, helping offset a 21.9% decline in VIP win to $1.02b. Sands ended the quarter with 370 VIP gaming tables (-20.8%) while mass market tables averaged 1,150 (+9.3%).

The Venetian Macao led the revenue chart with $943m (+0.8%), followed by Sands Cotai Central at $816.5m (+10.8%), the Sands Macao at $280.1m (-8.3%) and the Four Seasons Hotel Macao and Plaza Casino‘s $265.4m (-19.6%).

The VIP decline was on full display at all four Macau properties, with rolling chip volume down 28.4% at the Venetian, -32% at Sands Cotai Central, -40.3% at the Four Seasons and -17.5% at Sands Macao. Fortunately, VIP win rate was up everywhere except the Sands Macao.

In stark contrast, mass market table drop rose at the Venetian (+10.1%), Sands Cotai Central (+32.3%), Four Seasons (+17.7%) and Sands Macao (+0.8%). Slots handle was also up by double-digits everywhere except the Four Seasons and Sands enjoyed hotel room occupancy gains at all four properties.

At Marina Bay Sands in Singapore, revenue fell 5% to $735.5m and operating income fell 8.2% to $259m. VIP gambling fell over one-third and win rate fell 0.21 points to 2.64%. The mass market didn’t bail out Sands this time, with table drop falling 1.6%. Even hotel occupancy slipped 0.4 points to 99.4%.

Stateside, Sands’ two properties in Las Vegas eked out a 1.5% revenue gain to $380.5m while Sands Bethlehem in Pennsylvania enjoyed a 3.5% revenue rise to $127.3m. Tellingly, not one question on the post-earnings analyst call made any reference to Sands’ US properties.

On that call, Adelson minimized Macau’s four-months-and-counting revenue decline, noting that gaming was a cyclical business. Taking an even longer view, Adelson noted that nothing in the fundamental Chinese character – specifically, the willingness to ‘challenge luck’ – had changed over the past 3,000 years, let alone the past four months. Besides, Sands’ stats show Macau has to date welcomed only 1.5% of China’s overall population, so yeah, plenty of headroom left In that puppy.

Macau’s brain-trust doesn’t think Macau’s smoking ban, which took effect Oct. 6, is having any demonstrable effect on gaming revenue. Adelson called it a “red herring issue” and compared it to the hype that surrounded the Y2K computer crisis, which turned out to be “all a big hullabaloo about nothing.” Adelson said China was “an obedient society” and even the most diehard smoker would dutifully make his way to the designated areas, have a smoke then get back to his gaming.

Adelson took a shot at his crosstown rival in Singapore, Malaysia’s Genting Bhd., which operates Resorts World Sentosa. Adelson noted that Genting, which runs Malaysia’s only casino, had little previous experience with local competition and thus their initial reaction to a downturn was to “buy the business,” i.e. offer ridiculous incentives to premium mass gamblers to lure them away from MBS. Adelson rubbished such tactics and hoped that in time Genting would “get used to competing on the basis of a quality product… if they ever build one.”

Adelson singled out three Asian jurisdictions – Japan, South Korea and Vietnam – as appearing most promising for future expansion of the Sands brand. Adelson said his team had been spending “extensive” amount of time on the ground in Korea and, if the country relaxed its rules on allowing locals in casinos, Adelson promised “the most iconic building in the world.”

Adelson left Taiwan off this list, but Channel News Asia reported this week that Sands execs were evaluating property in Taoyuan County near Taipei, close to the country’s major airport. With the infrastructure largely in place, Taiwanese officials have cited the region’s Aerotropolis project as a more likely site for international casino development than the country’s outlying islands, but legislative revisions would be required.