LOS ANGELES/HONG KONG, May 4 (Reuters)- Billionaire Sheldon
Adelson's Las Vegas Sands Corp disappointed investors with a
lower-than-expected quarterly profit at its Singapore
casino-resort, sending the company's shares down 10 percent.
Sands posted first-quarter earnings below Wall Street forecasts
and said lower-than-normal casino table game winnings hit its
Singapore revenue by about $30 million and its Las Vegas revenue by
about $45 million.
Hong Kong-listed shares of Sands China Ltd , LVS's lucrative
Macau unit, fell more than 5 percent on Wednesday, despite beating
analyst expectations with a rise of 46.1 percent in quarterly
adjusted earnings before interest, tax, depreciation and
amortization (EBITDA)to $378.6 million.
Analysts said the share price fall was due to negative sentiment
over the parent company's Singapore operations, but strong
first-quarter figures and the opening of a new casino early next
year would give the stock further upside.
Kenneth Fong at J.P. Morgan in Hong Kong said Sands China was
strategically positioned for a better second half with strong
mass-market growth.
"On top of the operational improvement, we expect to see more
progress in construction of Lots 5 & 6 (Sands' next casino
project) when Galaxy Macau frees up labour gradually into its
opening," he said.
Operator of the Venetian casino resort in Macau, the world's
largest gaming market, Sands China posted a better-than-expected
property EBITDA, up 11 percent on the quarter.
Las Vegas Sands, which operates the Venetian and Palazzo resorts
on the Las Vegas Strip, earns most of its money in Asia, from its
newest resort in Singapore and in Macau, where allegations of
malfeasance by a former executive have prompted investigations by
regulators such as the U.S. Department of Justice.
Stellar gaming revenue in the former Portuguese colony has
boosted revenue streams for Sands China and casino magnate Steve
Wynn's Wynn Macau Ltd , despite competition from local players such
as gaming tycoon Stanley Ho's SJM Holdings Ltd , which has a near
one-third share of Macau's gaming market.
Macau gaming revenue set a new revenue record in April of $2.56
billion, with revenue expected to dwarf that of the Las Vegas strip
several times over for the year.
SINGAPORE DISAPPOINTS
But Singapore's Marina Bay Sands, which started limited
operations just about a year ago, generated adjusted EBITDA of
$284.5 million, well below the average Wall Street estimate of $325
million.
The giant iconic building is located at the mouth of the
Singapore river, while Genting Singapore Plc's Resorts World, the
only other casino in Singapore, is on Sentosa island.
The profit margin at the Singapore resort was 48.6 percent, down
from 54.6 percent in the fourth quarter of last year.
"Everybody is freaking out about the Singapore margin," said
Hudson Securities analyst Robert LaFleur. "They are generating a
phenomenal amount of EBITDA, but the question is we are going
through the first year trying to figure out the true profit
potential of that market."
The $5.5 billion Singapore Sands, the world's second-most
expensive casino resort after MGM's CityCenter in Las Vegas, held
its official opening in February and company officials said at
the time that it had already attracted 11 million visitors.
Unlike other gambling jurisdictions, including Macau and the
U.S. state of Nevada, the city-state does not announce monthly
gambling revenue totals, making it more difficult for investors to
gauge the market.
"There is nothing whatsoever that makes us think margins will
decrease," Adelson said on a conference call.
In Las Vegas, Sands posted adjusted EBITDA of $65.2 million,
which was also short of analyst estimates, as strong group meeting
and convention business was offset by a low rate of casino winnings
at table games.
Adjusting for one-time items, the casino operator earned 37
cents per share in the quarter, short of an average estimate from
analysts for 44 cents for share, according to Thomson Reuters
I/B/E/S.
The company reported a quarterly net profit of $228.2 million,
or 28 cents per share, a year earlier.
Overall net revenue for the quarter totaled $2.11 billion.
Analysts had expected a tad more, or $2.14 billion.
Sands shares closed at $45.87 in New York and were lower at
$41.44 in after hours trading.
