Las Vegas Sands Corp. used its second quarter earnings call Wednesday to tout its place at the head of the line when Japan gets around to awarding its three newly created gaming licenses, possibly sometime next year.
On a conference call with analysts, Las Vegas Sands President Rob Goldstein said the company has the “defining MICE (meetings, incentives, conferences and exhibitions) developments in Macau and Singapore,” in addition to strategic operations in the Asian market. He added the company has spent “a decade” in Japan helping lawmakers consider gaming legislation.
Las Vegas Sands Chairman and CEO Sheldon Adelson, however, didn’t mince words.
“Everybody says we have the leading position to win a Japanese gaming license because of my background,” said the 84-year-old Adelson, who produced computer trade shows in Japan decades ago. He also helped Japan leaders design a major convention center.
Japan’s parliament approved legislation last week that will bring three large scale integrated casino resorts to the country by the middle of the next decade. Many analysts believe the market will challenge Macau and Las Vegas for world dominance.
Fitch Ratings Service analyst Alex Bumazhny said in a note to investors earlier this week that the agency “believes there is a good chance” Las Vegas Sands will win one of three Japan licenses to develop an integrated resort in Japan.
In the past, Las Vegas Sands has said its would spend $10 billion on such a project in Japan.
During the quarter, Las Vegas Sands revenue grew 6.2 percent to $3.3 billion, of which $2.11 billion came from the company’s casino holdings in Macau. Total revenue in Macau grew 18 percent.
Net income grew 5.8 percent to $676 million and earnings per share was up 1.4 percent to 70 cents per share.
In Macau, net income increased 30 percent to $427 million.
Goldstein said the company views Macau “as a growth market” that is driven by hotel rooms. He said the company’s Macau properties run at 94 percent occupancy, which includes 100 percent occupancy on weekends.
The company’s Marina Bay Sands saw net revenue fall 15.4 percent to 705 million, which Adelson blamed on lower win percentage in the casino. However, in a statement Adelson said the “convention-based integrated resort business model” performed “exceptionally well.”
In Las Vegas, net revenue grew 2.5 percent to $402 million at the company’s Venetian and Palazzo resorts. However, net gaming revenue at the properties declined 25.9 percent but the declines were offset by double-digit increases in hotel revenue and other non-gaming amenities.
Goldstein said Marina Bay Sands is hampered at times because the property runs at capacity.
“We need more sleeping rooms and more gaming capacity,” Goldstein said. “We built a building that is always full.”
In the Fitch report, Bumazhny said the agency revised its view of Las Vegas Sands’ debt to positive from stable. He said Fitch is “becoming increasingly confident in Las Vegas Sands ability and willingness to manage its gross leverage target … through a major development cycle.”
As for Macau, Bumazhny forecast a 14 percent growth in gaming revenues for 2018, which reflects the continued health of both high-end play and the premium mass market.
He said Sands revenues could grow at a slower pace, particularly because of new supply and construction disruption Sands Cotai Central. The company plans to rebrand Sands Cotai Central to the Londoner. It will also build out suites at empty space inside the St. Regis tower and at a tower adjacent to the Four Seasons.
The company announced earnings after the markets closed. Las Vegas Sands’ share prices closed at $75.13, up 63 cents or 0.85 percent, on the New York Stock Exchange. The results caused the stock price to fall 4 percent in after-hours trading.
Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgamingreports.com. Follow @howardstutz on Twitter.
