Study of LVS
LVS price history
Macau-focused gaming stocks like MGM Resorts International (MGM), Las Vegas Sands (LVS) and Wynn Resorts (WYNN) rallied Friday, after regulators of China’s gambling hub settled on new measures surrounding licensing and other matters.
Taken together, the regulations appeared less harsh than anticipated by some investors. The new rules still need to be passed by the Macau legislature. However, they appeared to provide some closure after months of hand-wringing over the regulatory state of an industry dented by the pandemic and a crackdown by Chinese officials. Prior to the release, gaming licenses in Macau were set to expire by June.
The proposed measures would limit the total amount of gaming licenses handed out at six, according to a government announcement on Friday. However, they would cut the duration for casino licenses to 10 years, from 20. Many had feared a shortening to five years.
The rules would also reduce the extension periods on those licenses and increase local ownership of casinos to 15% from 10%. And they would put a limit on the public-share float of license holders.
But the rules for the gaming stocks would keep the tax rate the same. And they would not require a government official to sit on the casino operators’ boards — a possibility once under consideration.
B. Riley gaming stocks analyst David Bain, in a research note on Friday, said the bill “helps to remove a substantive overhang” for the six licensed operators in Macau: Wynn, Sands, MGM, Melco Resorts & Entertainment (MLCO), Galaxy and SJM.
Sands China Ltd (OTCPK:SCHYY) jumped another 14% in Monday trading in Hong Kong to follow on Friday’s big jump of more than 20%. Investors have warmed up to Macau casino stocks after a release of a gaming law report removed an overhang of any major revisions. Macau plans to grant six casino licenses in the region with a duration of 10 years and an option for a three-year extension. Significantly, there was not an increase in tax proposed above the current 40% rate and no restrictions on dividends to shareholders.
- 11/17/2021 – Will US’s vaccine help China with Covid policy, then help LVS?
U.S. Should Restrict Investment in China Due to Security Concerns, Panel Says – WSJ
The U.S. wants to counter China’s influence around the world by providing everything from infrastructure to vaccines and green energy. WSJ’s Stu Woo explains how the plan, dubbed Build Back Better World, aims to compete with China’s Belt and Road Initiative. Photo composite: Daniel Orton
- 10/28/2021 – Even if China causes regulatory troubles, Goldstein says, the Singaporean, Japanese, Korean, and Malaysian “markets are very, very fat and happy for us.” It’s missing out on the rebound in Las Vegas that has been propelling peers like Caesars Entertainment (NASDAQ: CZR) higher. Caesars’ stock price was up by 804% over the past five years as of mid-October 2021, outperforming the S&P 500’s 110% gains more than sevenfold. MGM Resorts (NYSE: MGM) is also cashing in on the Las Vegas Strip’s sizzling recovery. Its share price, relatively untouched by Macao-related concerns, is up by 231% over the past 18 months
Is Las Vegas Sands About to Become an Unstoppable Growth Stock?
Its latest quarterly report was uninspiring, but a rebound for the casino operator could be on the horizon.
- Las Vegas Sands has divested itself of all of its U.S. casinos and convention centers, and is now focused on Macao and Singapore.
- COVID-19 shutdowns have taken a toll on Macao’s gaming revenues, and Chinese government interference with casino operators looks likely to intensify.
- The casino company’s executives remained upbeat despite the weak third-quarter results
Sands’ latest bottom-line results look more like those a casino company might have put up during last year’s troubles. It’s missing out on the rebound in Las Vegas that has been propelling peers like Caesars Entertainment (NASDAQ: CZR) higher. Caesars’ stock price was up by 804% over the past five years as of mid-October 2021, outperforming the S&P 500’s 110% gains more than sevenfold. MGM Resorts (NYSE: MGM) is also cashing in on the Las Vegas Strip’s sizzling recovery. Its share price, relatively untouched by Macao-related concerns, is up by 231% over the past 18 months
While the company traces its origins back to the Sands Hotel built back in the mid-20th-century gangster days of Meyer Lansky and Benjamin “Bugsy” Siegel, who were among those who turned Las Vegas into a U.S. gambling hub, it refocused its business on Macao in the early 2000s under the leadership of Sheldon Adelson. Following Adelson’s death, the company sold its last major U.S. properties (except for its headquarters) in March for $6.25 billion. The sale included both its Sands Expo and Convention Center, and its iconic casino and resort, the Venetian. That effectively ended its American operations; it now relies primarily on its Macao and Singapore casinos and resorts for revenue.
While its recent results, and share price, are currently overshadowed by the performances of peers operating in “Sin City,” Las Vegas Sands’ latest earnings conference call contained no trace of alarm or pessimism. CEO Rob Goldstein noted the company is awaiting full reopening in Singapore, and said that “spend in Macao has proven … resilient.” Sands’ leadership, he said, has “great optimism about our ability to perform to a pre-pandemic level once visitation has returned.” He noted that the sale of Sands’ U.S. properties gave it additional liquidity it could use to bridge future slow periods.
Goldstein also said the successful 2021 Las Vegas reopening, occurring far ahead of the 2024 to 2025 rebound he heard predicted last year, foreshadows a similar swift, strong recovery in the near future in the Asia gambling market. He predicted a 2022 reopening for Singapore and other Asian markets, and highlighted that Sands can still earn $1 billion without Macao given the caliber of its Singapore operations. Even if China causes regulatory troubles, Goldstein says, the Singaporean, Japanese, Korean, and Malaysian “markets are very, very fat and happy for us.”
Also notable is the fact that while Wall Street bid down Sands’ stock price on the day following its Q3 report, its shares fell only a bit more than 2% in morning trading. The lack of a more dramatic plunge suggests investors may have already priced in most of the potential downside from the Singapore and Macao situations.
Las Vegas Sands appears to have dropped roughly as much as can be expected. Assuming the intensified Chinese regulation over Macao doesn’t amount to a total ban on gambling or something nearly as catastrophic, Sands could be set for a scorching bull run once gambling in Asia turns around. That’s likely to take place next year considering Asia’s high and still-rising COVID-19 vaccination rates. The casino enterprise’s stock is currently so low that it has massive upside potential once the rebound starts, meaning this could be an excellent buying opportunity for those investing in leisure stocks — provided they’re willing to gamble against regulatory risk and the uncertain timing of Sands’ eventual triumphant recovery.
- 10/12/2021 – need to read them again
Las Vegas Sands: Bears Have Traded It Down To A Screaming Buy
- The ongoing pandemic continues to hammer the stock. Waiting for a further dramatic dip to enter could be a bad strategy.
- Easily ignored: LVS generated near $13b in revenue in 2019, over $8b of which came from Asia. Recovery in fits and starts but is inevitable as China vax levels soar.
- Post Adelson, management appears to be hesitant to move on key issues, some of which are related to family foundation moves.
- Looking for a helping hand in the market? Members of The House Edge get exclusive ideas and guidance to navigate any climate.
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- 08/26/2021 – will LVS come back soon?
