Sands China results short of expectations
Local gaming operator Sands China posted revenues of USD 1.09 billion (MOP 8.7 billion) in the last quarter of 2010, 13.1 percent higher year-on-year. However, the markets have reacted badly to the results announced last week, as the stock of parent-company Las Vegas Sands (LVS) dropped by 6.2 percent at the New York exchange. The operator’s performance, analysts said, was far below the market average in Macau. In the fourth quarter of 2010, the gaming sector reported a global growth of 52.3 percent on revenues. “We have seen strong trends out of Macau, but that didn’t translate into significantly higher numbers for Sands versus where we were three months ago,” ITG Investment Research analyst Matthew Jacob told Reuters. Some investors have a “misplaced infatuation” with gaming revenue, LVS chairman Sheldon Adelson said in a conference call. “We believe EBITDA should be the true metric on which [our] performance is judged,” he added. Sands China’s adjusted earnings before interest, tax, depreciation and amortization (EBITDA) rose 36.7 percent to a record USD 332.8 million (MOP 2.7 billion). Furthermore, the local operator managed to pocket “a market-leading 31.8 percent” of its revenue, Adelson stressed in a statement. [The] “adjusted property EBITDA margin expanded across the Sands China property portfolio,” he added, which includes the Sands, Venetian and Plaza casinos. But the most impressive, according to Galaviz & Company managing director Jonathan Galaviz, was the company’s profit, which more than tripled to reach USD 213.3 million (MOP 1.7 billion). “It seems as though Sands China has focused on the management of expenses to the point of having a meaningful positive impact on quarterly net income,” he told Macau Daily Times. “In the end game, the most important measure of any company’s success is its absolute net income figure,” Galaviz stressed. Plaza in the red Sands China’s flagship resort, Venetian, continues to “strong visitation and financial performance,” the operator wrote. The Cotai property posted both a record EBITDA of USD 235.6 million (MOP 1.9 billion), an eye-popping 35.6 percent of its revenue. The mass-market gaming volume also reached an all-time high, USD 961.2 million (MOP 7.7 billion). The EBITDA margin also improved from 19.8 to 29.3 percent at Sands casino, to reach earnings of USD 93.4 million (MOP 749 million). Furthermore, the property almost doubled its profit to USD 84.5 million (MOP 677.7 million). On the contrary, the Four Seasons hotel and Plaza casino had a negative last quarter of 2010. The Cotai resort had a loss of USD 3 million (MOP 24 million) as its results “were negatively impacted by lower than expected” win percentage at the VIP market, LVS chief executive officer Michael Leven confirmed in a conference call. “Strong revenue growth and margin expansion in Macau” helped LVS reach “an industry-leading financial performance” in the fourth quarter of 2010, Adelson acknowledged. The US company posted revenues of USD 2.02 billion (MOP 16.2 billion), 57 percent higher year-on-year. However, this figure still fell short of the USD 2.07 billion expected by analysts. Plots 5, 6 in 2011 The first phase of the resort Sands is building on Cotai plots 5 and 6 will open “at the end of this year,” Adelson said. This initial part will have Shangri-La and Traders hotels, with around 1,000 rooms and one casino, he added. But, the millionaire emphasised, “that’s the worst-case scenario that we’re looking at now. It could be better if in fact we get more employees coming in. We’ve got the approvals for them. We just have to match the one for one” [minimum ratio of local to imported workers in the construction industry]”. “We’re just looking to get the Macanese coming off of Galaxy to do it,” Adelson said. “Our expectation is to get by the end of February an additional 3,000 workers from the Galaxy construction [site],” he revealed. “We stand at about 3,500 workers on the site today.” Last August, Michael Leven said the construction works at plots 5 and 6 would involve “10 to 11,000 workers” at their peak point. The resort should only be fully complete by “the end of 2012 or in the beginning of 2013,” Adelson said during last week’s conference call. Apartments ‘alive’ Although Sands China had only until April 2013 to develop Cotai plot 3, “we’re quite confident, though, now should we want an extension on 3, we’ll be able to get it,” Leven assured. “If not, we do own it, and the potential of monetizing it might be very well there for us.” “Frankly, I think we’re waiting to see how we do with 5 and 6 in terms of getting it open and getting the employees out of the facility necessarily to make it successful before we actually start site 3,” he added. The LVS president also expressed optimism on the negotiations with the Government on the sale of serviced apartments at Four Seasons as part of a housing cooperative. “I feel very confident we’ll get something in this quarter.” “In the last day, [last Wednesday] we’ve received the document for some of the detail on the continued negotiation for the contract for monetization of the proceeds in serviced apartments. So this is not a dead issue,” Adelson confirmed. “And it looks like most of the subset of issues are completed, and there were just a little tweaking left to do on the contract.” Meanwhile, LVS is considering paying down around USD 2 billion (MOP 16 billion) outstanding debt in Macau “within the next 18 to 24 months,” Adelson disclosed. “We’ll be debt free in the other three properties if we pursue that road, and then we will upstream dividends to” the US company, he said. Last September, Adelson denied that LVS was trying to siphon profits from Sands China.
http://www.macaudailytimes.com.mo/macau/...ts-short-expectations.html
Zurück
