Posted: July 25, 2022, 2:37 a.m.
Last update: July 25, 2022, 2:51 a.m.
Marina Bay Sands – the crown jewel of Las Vegas Sands (NYSE:LVS) – could eclipse its 2019 revenue as early as next year, providing support for the Macau-dependent gaming company.
In a note to clients, CBRE analyst John DeCree points out that the recovery at Marina Bay Sands is proving stronger than expected. The data confirms this.
Sands announced its second-quarter results last week, noting that earnings before interest, tax, depreciation and amortization (EBITDA) for its Singapore integrated resort were $319 million, well above a forecast of $250 million. Wall Street.
The recovery in gaming revenue at Marina Bay Sands has been much better than expected…and we still see plenty of room for further recovery at MBS,” writes DeCree.
Marina Bay Sands is one of two integrated resorts in Singapore, and the other is Genting’s Resorts World Sentosa. Under city-state laws, sites enjoy duopoly protection.
Singapore supporting the LVS thesis
While analysts remain bullish on the long-term on Las Vegas Sands, the gaming giant faces near-term challenges due to weakness in Macau, which operates five integrated resorts.
Casinos there reopened on Saturday after a nearly two-week closure caused by a recent spike in coronavirus cases. Still, Q3 gaming gross revenue (GGR) in the Special Administrative Region (SAR) is expected to be dismal. Analysts believe the recovery will not materialize for perhaps a year or more.
For LVS, this places an additional burden on Marina Bay Sands to support the investment thesis, as the operator’s current portfolio is entirely made up of the Macau and Singapore locations. The Singapore integrated station is a source of strength for Sands and by some estimates accounts for around half of the company’s market capitalization. The data indicates that he supports the company at this stage.
“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,” adds DeCree. “We expect gaming revenue at MBS to eventually surpass 2019 levels, likely in 2023, similar to trends seen in US casinos.”
More catalysts for Marina Bay Sands
During the company’s second-quarter earnings conference call, Sands CEO Rob Goldstein said air travel to Singapore was picking up and visits to Marina Bay Sands by tourists from countries such as Singapore. Indonesia and Malaysia were strong. Still, there could be more catalysts on the way as the city-state reopens further.
“The number of monthly visits from China is still less than 50% of what it was before the pandemic, so while we are delighted with Singapore, and the numbers reflect that, there are reasons for more optimism in the coming months”, Goldstein said on the call.
Sands is undergoing $1 billion worth of upgrades to its Singapore property.
“We look forward to significantly increasing our investment in the Singapore market as we execute our expansion plans, and Marina Bay Sands in the coming years. Singapore remains in an exceptional market for additional investment,” added Goldstein .