First-quarter numbers for Las Vegas Sands were “nicely ahead” per J.P. Morgan analyst Joseph Greff, who said Sands’ Macao casinos were firing on all cylinders (mass-market play, VIP action, slots, retail and lodging). He expected Macanese cash flow of $304 million and got $385 million, far more than the rest of Wall Street was awaiting. “There is still ample room for further recovery,” Greff wrote, noting that Sands had achieved the near-unthinkable with only 69% of hotel rooms (due to a labor crisis), 25% of normal ferry capacity, low passenger loads—39% of capacity—at Macao’s dinky airport, and “less robust visitation” from Hong Kong (74% of peak performance) and Guangdong Province (55%). Retail sales of $109 million were particularly impressive, as they hit 95% of pre-Covid altitude. Beyond that, Chinese mainland visitation is very low: 27%. Still, he expects “a rising tide to lift all Macau boats.” As for Sands itself, its labor crunch is expected to ease by summer, so neither Greff nor management is worried.
Sands did even better in Singapore, where its one casino resort generated cash flow of $412 million, whereas Wall Street expected as little as $350 million. Mass-market gambling brought in revenue of $549 million and junket-extended credit hit heights not seen in four years. “These solid results were achieved despite room renovations (20% of its rooms were out of service given its suite renovation program) and subdued visitation from China (which was a sizable ~1/3 of EBITDA in 2019) as well as airline capacity that is not fully recovered,” wrote Greff, adding that this means more upside is still to come. That’s good because Sands has big capex plans for Marina Bay Sands ($575 million), plus another $50 million to finish The Londoner in Macao. Even bigger spend is slated for next year: $900 million, almost half of which goes to Singapore.
Greff’s opposite number at Deutsche Bank, the pithy Carlo Santarelli wrote that “LVS reported meaningfully stronger-than-expected results in Macau, which we believe will further allow the investment community to embrace the higher margin profile in the market upon GGR normalization.” Which means he liked what he heard, adding that the tight labor market and the mix of gaming revenue would redound to the benefit of the company’s cash-flow and profit margins. VIP play experienced a “meaningful uplift” in March, which bodes well for the current quarter—which management mercifully didn’t tease. As for Singapore, he noted that bread-and-butter gambling “accelerated significantly” despite airport traffic being 78% of pre-pandemic volume. Santarelli was sufficiently inspired to raise his LVS price target a fiver to $74.
Finally, Ben Chaiken of Credit Suisse joined the chorus of praise, writing “In some respects, street estimates were stale given fast-moving recovery, but the quarter was still strong … Macau is attracting a lot of international demand, particularly, a strong international Asian high-end premium customer, without negative impact to Singapore.” Unlike Greff, he saw the lack of hotel staff, and airport and ferry constraints as real concerns looking ahead. Sands has 7,700 available rooms out of an inventory of 12,000. It will cost more to operate at full capacity, Chaiken argued, but will “presumably” come with higher gambling revenue (a safe bet). Also, Sands increased market share to 27% at a time when it was bringing more hotel rooms on line, rather than diluting demand: “this creates a compelling setup and should drive estimates higher.”
Remember this? It was Viva, the proposed, $11 billion Station Casinos rival to CityCenter. (More expensive! Worse location! Even fuglier!) We mention it because this is probably the last time you’ll ever see this rendering, which is going the way of Steve Wynn‘s King Kong. Station has found the highest and best use for those 49 acres: Selling them to the Oakland Athletics, so that the team can build a $1.5 billion ballpark. No sooner had word of the deal leaked out via the Nevada Independent than the City of Oakland terminated further stadium talks with the A’s, who’d been stringing the city along for six years. Gov. Joe Lombardo (R) is described as being supportive of the deal, which would finance the stadium through—you guessed it—new taxes. We’d call Joe a “tax and spend politician” but that might hurt his feelings.
If all goes according to plan, the 35,000-seat, retractable-roof stadium would be finished in time for the 2027 season, by which point the A’s might have a sniff of the World Series although (given their dysfunctional “Moneyball” philosophy) it seems extremely unlikely. The stadium, however it is financed, will be a much better bargain than the $2.2 billion MSG Sphere. At last glance, Madison Square Garden was liquidating its Tao Group stake in order to waste, er, invest the money on the Sphere. At least it’s private-sector money. Also, teams that move to Sin City or expand here tend to perk up (think Golden Knights and Las Vegas Aces). We’ll gloss over that whole Las Vegas Raiders thing for now. Our condolences to Phil Ruffin and Bally’s Corp., who played ball with the A’s and lost. Chalk this up in Station’s “win” column.
Coney Island residents blew a raspberry to casino plans for their area last night, leaving wannabe developers “on the defensive.” Pleaded one constituent, “Please leave us alone!” “This project is a travesty,” vented someone else. Number of supporters? A big, fat zero. “It’s never easy to come to a meeting where so many people are opposing something,” wailed project consultant Michael DeLoach. $3 billion The Coney is a camel cobbled together by a committee consisting of Thor Equities, the Chickasaw Nation, upstate Saratoga Casino Hotel and Legends Hospitality Group. While casino proposals from Mohegan Sun, Las Vegas Sands and Caesars Entertainment have all drawn citizen opposition, none has hit such a nerve as The Coney. New York State politics are strange but this casino bid looks D.O.A.
Jottings: Could Bellagio‘s real estate be up for grabs? Or The Cosmopolitan of Las Vegas? Although casinos were reliable and generous revenue makers for REITs during the Covid-19 pandemic and afterward, the problem may be elsewhere. Seeking Alpha reports that Blackstone Group is “Increasingly desperate to raise capital to meet redemptions—a function of its overstated self-reported NAV valuation” and that more of its casinos could be sold soon. Perhaps that was the Las Vegas Strip asset transaction that Deutsche Bank analyst Carlo Santarelli was hinting at recently … Truth be known, we prefer Reno to Las Vegas, as it’s more temperate, more scenic and more varied. Just a few of its non-casino highlights get spotlit this week …
If you thought Las Vegas bottle service was pricey, try the Formula One race in Miami, where it’s topping out at $200,000. That’s a lot of Benjamins for some off-brand vodka and cranberry juice. Tickets are going for a comparatively reasonable $5K a pop. We’d say don’t give Big Gaming any ideas but it’s already taking notes … Cordish Gaming is sparing little expense to replace Diamond Jacks in Bossier City. It’s talking up a $250 million casino that would entail scrapping the riverboat and revamping the unprepossessing hotel. 1,000 slots are on the drawing board, along with 30 table games and unspecified number of ETGs. “The reputation of The Cordish Companies throughout the country to own and operate first-class casinos, restaurants, hotels, and entertainment destinations is exemplary,” said Louisiana Gaming Control Board Chairman Ronnie Johns and we heartily concur … Star Entertainment continues to slowly go down in flames. The troubled Australian casino firm is taking out its regulatory woes on workers. It will make up fines by freezing salaries and pink-slipping 500 workers. At least executive bonuses are also going onto the pyre but this is a generally shameful move. Accountability’s a bitch …
Here’s a new one to us: You can buy that special someone a BetMGM (or other brand) sports-betting gift card, at least if you live in Ohio. You can pick one up at any convenience store or big-box retailer, sparking fears among responsible-gaming advocates—but at least the cards can’t be reloaded, a small favor … If you’re driving through Mississippi and want to combine refueling and gambling, look no farther. The Mississippi Band of Choctaw Indians has broken ground on $25 million Louisville Travel Plaza. When finished it will provide sports betting, 150 slots and create 100 jobs … Morongo Casino Resort & Spa is redoing its high-limit slot room. The California gambling hall is cannibalizing its valet parking to add capacity for 170 more slots, plus ritzy cocktail service … Grand Island Casino in Nebraska is doing so well it’s already onto expanding its gaming floor. Once horseracing season ends 40 slots and eight table games will be added. The whole shebang is to be up and, uh, running by July 1.