Las Vegas Sands beats street, Macau recovery “robust”
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Las Vegas Sands beats street, Macau recovery “robust”

Gaming titan Las Vegas Sands reported strong quarterly figures last week that beat expectations and pointed to a “robust recovery” in Macau, the world’s largest gambling hotspot. In the company’s fourth quarter, profit more than doubled against the previous year: from $509 million to $1.2 billion (or 64¢ per share to $1.53 per share). The casino operator said that these profits reflected a beneficial effect from the recent Tax Cuts and Jobs Act that worked out at $526 million. If you adjust for that figure, the company earned 88¢ per share – a significant beat over both Wall Street’s top-line estimates (77¢ per share) and the previous year’s figure.

Las Vegas Sands is up 9% so far this month 

graph 0129 las vegas sands

SOURCE: Yahoo Finance

Profit wasn’t the only thing rising in Macau, as Sands reported a 12% increase in revenue, year on year, to $3.44 billion. Macau was a major contributor, seeing a 13% boost to $2.1 billion. Again, consensus estimates fell short of reality: analysts had expected to see revenues of $3.3 billion in total.

Sheldon Adelson, Sands’ founder, chairman, and chief executive officer, said “The Macau market continued its robust recovery during the quarter, with growth in the important Mass gaming market accelerating in the fourth quarter of 2017.”

Macau has emerged from a 2-year slump that began in 2014, driven by Beijing’s anti-corruption drive, which curbed conspicuous consumption in the country, and wider concerns about China’s economy. However, with those headwinds dispersed, China’s only legal region for casino gambling is seeing an upswing in performance. According to some analysts, this is just the beginning. Morgan Stanley has claimed that Macau is “in the early stages of a multiyear growth path.” If you look at Las Vegas Sands’ latest results as an omen, that seems hard to argue against.

Disclosure

Dominion holds Las Vegas Sands in its Global Trends Luxury Fund.


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