Marina Bay Sands — the jewel in the Las Vegas Sands (NYSE:LVS) crown — could eclipse its 2019 revenue as soon as next year, providing support for the Macau-dependent gaming company.
In a note to clients, CBRE analyst John DeCree points out that recovery at Marina Bay Sands is proving stronger than expected. Data confirm as much.
Sands reported second-quarter results last week, noting earnings before interest, taxes, depreciation and amortization (EBITDA) at its Singapore integrated resort was $319 million, well ahead of the $250 million Wall Street forecast.
The gaming revenue recovery at Marina Bay Sands has been much better than expected … and we still see plenty of room for further recovery at MBS,” wrote DeCree.
Marina Bay Sands is one of two integrated resorts in Singapore, and the other is Genting’s Resorts World Sentosa. Under the city-state’s laws, the venues have duopoly protection.
Singapore Supporting LVS Thesis
While analysts remain bullish on Las Vegas Sands long-term, the gaming giant faces near-term challenges due to weakness in Macau, which runs five integrated resorts.
Casinos there reopened Saturday following a nearly two-week shutdown caused by a recent surge in coronavirus cases. Still, third-quarter gross gaming revenue (GGR) in the special administrative region (SAR) is expected to be bleak. Analysts are estimating recovery there won’t materialize for perhaps another year or longer.
For LVS, that puts an added burden on Marina Bay Sands to support the investment thesis because the operator’s current portfolio is comprised entirely of the Macau and Singapore venues. The Singapore integrated resort is a source of strength for Sands and, by some estimates, represents roughly half the company’s market capitalization. Data indicate it is supporting the company at this juncture.
“The depth of the local market is apparent, and with Macau virtually shut down still, Singapore remains a key beneficiary of displaced gaming customers across regional Asian markets,” adds DeCree. “We expect gaming revenue at MBS will ultimately exceed 2019 levels, likely in 2023, similar to trends seen at US casinos.”
More Catalysts for Marina Bay Sands
On the company’s second-quarter earnings conference call, Sands CEO Rob Goldstein said that air travel to Singapore is perking up, and visits to Marina Bay Sands by tourists from countries such as Indonesia and Malaysia are sturdy. Still, there could be more catalysts on the way as the city-state further reopens.
“Chinese monthly visitation numbers are still less than 50% of what they were pre-pandemic so although we are delighted by Singapore, and the numbers reflect that, there is reason to be more optimistic in the months ahead,” Goldstein said on the call.
Sands is amid $1 billion worth of enhancements at its Singapore property.
“We look forward to substantially increasing our investment in the Singapore market as we execute our expansion plans, and Marina Bay Sands in the years ahead. Singapore remains in an outstanding market for additional investment,” added Goldstein.
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