LVS facing lower Macau market share in 2Q24 | LVS, Gaming, & Transocean Forum

LVS facing lower Macau market share in 2Q24 Jul 9, 2024 7:02:24 GMT -5

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Post by Blitz on Jul 9, 2024 7:02:24 GMT -5

Las Vegas Sands facing lower Macau market share in 2Q24: Deutsche Bank

Nelson Moura - July 9, 2024
agbrief.com/news/macau/09/07/2024/las-vegas-sands-facing-lower-macau-market-share-in-2q24-deutsche-bank/

Despite Gross Gaming Revenue (GGR) in Macau slightly surpassing forecasts for the second quarter of 2024, Las Vegas Sands (LVS) is expected to face challenges in market share and non-gaming contributions, brokerage Deutsche Bank noted.

These factors are projected to impact the company’s property EBITDAR for the quarter with LVS revising its Macau property EBITDAR estimate to $600 million, or $605 million including ferries and other operations, from the previous $621 million.

The brokerage also expects that given comparable developments and the cost escalation associated with these developments over the last several years, the construction budget for the Marina Bay Sands (MBS) new tower in Singapore will likely be above $4 billion.

Still, Deutsche Bank upped its EBITDAR forecast for MBS to $488 million from $454 million.

Despite these short-term challenges, analysts from Deutsche Bank remain optimistic about the company’s long-term growth prospects, citing continued organic growth in Macau and Singapore, the refurbishment of The Londoner, expansion at MBS, and other development opportunities.

Macau market dynamics

The Londoner, Sands China, Macau

For the DB analysts, LVS’s market share in Macau has been slipping, which caused some concern among investors as despite a stabilizing GGR trajectory, the trend raises questions about the near-term growth for LVS.

The primary driver of this share loss is believed to be the rooms taken offline, with competition in the mass market also contributing.

‘As The Londoner Phase II progresses towards completion by the end of the year and into the first quarter of 2025, there is potential for an increase in market share, particularly in the mass market,’ reads the brokerage dispatch.

In 2019, LVS accounted for approximately 31 percent of the hotel rooms in Macau and had a mass gaming revenue share of about 32.8 percent. Currently, LVS’s room footprint represents roughly 26 percent of the market, with a mass share of 30.6 percent as of the first quarter of 2024.

For the second quarter of 2024, LVS is expected to experience a year-over-year market share loss of about 300 basis points, though sequential market share is anticipated to remain consistent.

Through May, LVS’s GGR share was in the 23.5-24 percent range, similar to the 23.8 percent share in the first quarter of 2024, with Deutsche Bank estimations assuming a mass market share of approximately 28 percent, down 150 basis points quarter-over-quarter, and a VIP share of 9 percent, up 190 basis points quarter-over-quarter.

‘The flat sequential share is disappointing given the lower VIP hold in the first quarter of 2024, with the decline in mass share likely due to the additional room inventory being offline,’ the dispatch added.

Pipeline and expansion

Marina Bay Sands, expansion, MBS, Las Vegas Sands

While there are no expected changes to the development pipeline, the brokerage expects some disruption at The Londoner from its expansion throughout the second half of 2024.

Additionally, management is anticipated to provide a new estimate for the construction costs associated with the MBS expansion in Singapore.

Originally projected at approximately $3 billion, including around $900 million for the land premium paid several years ago, the budget is likely to exceed $4 billion due to comparable developments and cost escalations.

‘Notably, the new facility will likely include gaming operations, which were not part of the initial budget,’ DB analysts added.

LVS facing lower Macau market share in 2Q24 Jul 10, 2024 5:25:48 GMT -5 birdnest likes this

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Post by Blitz on Jul 10, 2024 5:25:48 GMT -5

Sands, Wynn Price Targets Lowered on Recent Macau Softness

Posted on: July 9, 2024, Todd Shriber
www.casino.org/news/sands-wynn-price-targets-lowered-on-recent-macau-softness/

Following a surprisingly soft June gross gaming revenue (GGR) report in Macau, an analyst modestly pared price targets on Las Vegas Sands (NYSE: LVS) and Wynn Resorts (NASDAQ: WYNN), though he remains constructive on both casino stocks.

The Wynn Macau casino hotel. An analyst lowered price targets on Sands and Wynn. (Image: Bloomberg)

In a new report to clients, Macquarie analyst Chad Beynon revealed new price forecasts on Sands and Wynn of $58 and $126, respectively, down from $60 and $128. For Sands, which is the largest Macau operator with five integrated resorts, that implies upside of 40% from the July 8 close. Beynon’s new price target on Wynn implies 12-month upside of 30%.

Overall, we believe consensus remains conservative, particularly for WYNN, which we believe can gain share. We continue to be bullish on the long-term growth prospects for Macau, and ranked Macau as our top sectors in our 2024 Gaming Prime,” wrote the analyst.

He maintained “outperform” ratings on both Sands and Wynn as well as MGM Resorts International (NYSE: MGM). MGM owns of 56% of MGM China, which runs two Macau casino resorts. Macquarie’s price target on that stock remained unchanged at $58.

Macau GGR Still Trending in Right Direction

While the June numbers came in below expectations, Macau’s GGR is trending in the right direction. For the second quarter, the combined figure was $7.1 billion, or 23% below the comparable stretch in 2019 — the last year prior to the coronavirus pandemic. That’s slightly better than first-quarter GGR, which was 25% below the same timeframe in 2019.

Annual visits to the Asian casino center trended higher in the decade ending 2019, peaking at 39.40 million in that year, but in 2023, that number was 28.21 million. That implies there’s still a long runway for Macau operators to get back to pre-pandemic norms and, if that goal is achieved, Macau gaming equities could benefit.

Still, investors have exercised little patience with Macau equities in 2024 as the group is lower by 7% while the S&P 500 is higher by almost 17%. LVS, MGM and Wynn are all members of that index.

“We expect July GGR to be ~$2.4 billion or -22% vs 2019. Looking at the 3- year pre-COVID average, July is typically +10% vs June, and we forecast July 2024E to be +8%,” added Beynon. “Looking ahead to 3Q, we are calling for $7.4 billion of GGR, which would imply +4% sequential, +20% year-over-year, and -17% vs 2019. Consensus currently calls for 3Q24E Macau EBITDA quarter-over-quarter to be as follows: LVS +3%, WYNN +1%, and MGM +0%.”

Mass Bettors, Non-Gaming Fare Could Lift Sands, Wynn

Integral to the broader investment thesis for Sands and Wynn is the ability of those operators to capture more share among mass market bettors in Macau and leverage non-gaming amenities there. Those are relevant pursuits because the enclave’s VIP market remains stagnant.

There’s evidence that the operators and rivals are accomplishing those objectives with Sands China proving particularly adept at capitalizing on non-gaming offerings while Wynn Macau has shown progress in pivoting to mass market players. Those could be among the reasons why Macau’s 2024 GGR figure will be solid.

“For 2024, we expect GGR of -20% vs 2019 (+28% YoY), or ~US$29.3bn, with mass continuing to run above pre-pandemic levels. With additional operator revenue growth in mass and non-gaming, we model for margin upside despite higher opex concessionaire commitments,” concluded Beynon.