Las Vegas Sands: Prudent Move Here Is To Take Some Profits
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Las Vegas Sands Corp. is a developer and operator of integrated resorts that feature luxury hotels, gaming, retail, dining and entertainment. Premier locations exist in Singapore and Macau, and there are plans to expand elsewhere in to Asia.
Las Vegas Sands has made a 5% gain since I last covered it a little over four months ago. I have some concerns about the broader equity market and discretionary plays like LVS in particular. As a result, I will switch my rating to "hold".
LVS is very exposed to what is happening in Asia, especially China. LVS will exit its flagship Las Vegas properties in 2021. This could be a great move for management over the long-term, but it poses a challenge in the short- term.
There is more uncertainty regarding travel to Macao due to the lockdown in China. Las Vegas Sands has been outperforming in this environment. The outlook for Macoa remains clouded. LVS has generated alpha but I suspect the trend is going to run out of momentum. I downgrade Las Las Sands to a lower rating. I want to buy in to uncertainty when there is panic in the air. This is not the case with L VS. It's time to downgrade. iReport.com: Las Angeles Sands is a Poor Investment.
Las Vegas Sands is performing better than Macao in terms of revenue. Management's decision to divest Las Vegas properties is probably regretful.
The overall revenue for Las Vegas has been trending higher in 2022 than in 2021. This is an encouraging sign for casino operators with heavy exposure to Vegas. Macao is struggling with lockdowns. LVS is not the best place to be if one wants gaming exposure.
LVS has seen a decline in earnings figures compared to Q1. LVS's growth potential is still there, but as Covid cases surged and lockdowns resumed, L VS has struggled to earn.
Las Vegas Sands is seeing a drop in gaming spend and visitors. Macao visitation has been severely impacted by the Chinese lockdowns. LVS is a difficult earnings story to get behind for buying and holding the stock.
Political and regulatory environments in Macao are less favorable for casino operators. This impacts LVS and other primary operators in the region.
There have been some changes in Macao that are less favorable to casino operators. All six of the casino operator in the city will have their licenses renewed for 10 years. The casino tax on gross revenues will increase to 40% (up from 39%). A Macaon-based director of a company must hold 15% of share capital. Casinos must generate at least $886,000 per table per year for tax purposes.
All six casino operators in Macao will have their licenses renewed for 10 years. The casino tax on gross revenues will increase to 40% (up from 39%). A Macaon-based director of the company will hold 15% of share capital.
LVS has offered investors "alpha" since late April. The relative out-performance of Las Vegas compared to Macao works against LVS. Chinese government continues to take an aggressive approach with lockdowns to confront Covid-19.
