Analysts have upgraded their estimates for Las Vegas Sands (LVS) after the company reported strong recovery indicators during this week’s 4Q22 results release and earnings call.
The improved sentiment was largely driven by the reopening of Macau’s borders on 8 January, which has seen visitors flood back to the SAR during the current Chinese New Year holiday and provided a welcome revenue boost for long-suffering concessionaires.
As reported by Inside Asian Gaming, LVS executives said the company was already “way past” breakeven point with GGR recovery over Chinese New Year comfortably outperforming pure visitation numbers.
In a Thursday note, CBRE Equity Research analyst John DeCree said he was upgrading LVS to “Buy” with the company’s early take on Macau recovery “enough to increase the appetite of investors.”
“With revenue and spending across gaming and non-gaming segments exceeding visitation volumes in the early days of reopening, we are beginning to see key similarities between Macau and the recovery in other markets that would suggest an eventual rally beyond 2019 levels,” DeCree said.
“As long as this prospect of eclipsing 2019 EBITDA levels remains alive in Macau, we see the green light to own the group. Specifically, LVS has the breadth and depth of hardware in Macau to capture significant wallet share, not just on the gaming floor, but across non-gaming verticals, likely giving the company a head-start in the early recovery days.”
JP Morgan’s DS Kim added, “While 4Q print was backward-looking given Macau’s recent re-opening in January, we’re pleased to hear such upbeat commentary from the management, especially given the not-so-amazing visitation during Lunar New Year (LNY).
“Net-net, we are confident of the pace/magnitude of demand recovery from here and resulting upside risks to estimates – and for that, we feel its current valuation is very attractive.”
There is similar sentiment for Marina Bay Sands in Singapore, which saw VIP volumes reach 90% of 2019 levels while mass gaming exceeded 2019 by 9%, setting a new all-time record.
“MBS achieved these results in the quarter without a full return of travel and with about 20% of its room capacity offline due to ongoing renovations,” DeCree said.
“With China outbound travel just now picking up, and more rooms to meet demand coming back online, we see plenty of room for MBS to run over the next several quarters and ultimately expect the property to exceed 2019 EBITDA levels.”
CBRE is upgrading LVS to “Buy” and raising its price target from US$47 to US$68, with the new target “driven by higher estimates in both Macau and Singapore and a higher multiple in Macau.”
