Macau to remain muted, Las Vegas Sands now relies on Singapore

Las Vegas Sands (NYSE: LVS) is welcoming another quarter in the books without reopening its marquee market, Macau. Sands, which currently runs five integrated resorts, had another vote of confidence on Wednesday to encourage investors, offering a favorable risk/reward setup.

June was admittedly the worst month of the year for Macau operators in terms of GGR and JPMorgan’s Asia team’s analysts revealed that six Macau concessionaires, including Sands China, are most likely unable to report positive earnings for the quarter with the next earnings season slated to start this month.

“We don’t think there is a strong view for any gross gaming revenue (GGR) come-back for Macau until next year (at the earliest) since it’s been near impossible to predict easing of mainland China’s zero COVID-19 tolerance policy,” said J.P. Morgan analyst Joseph Greff.

With Macau being muted, Greff lowered his estimates while, on the other hand, boosting the estimates for Singapore.

“Our sense is that when we point this out to investors, they are surprised it is that high and the general perception is that Macau is the majority of the current equity value (and it was in the past when Macau was in its strong performing periods, prepandemic),” said Greff in his report, adding that many industry participants regard Macau as a “washed out” market.

Since Greff and many other analysts predicted that Macau won’t be able to make its comeback any time this year, all eyes turn to Singapore, which, according to Greff, is the source for approximately half of LVS’ current market cap.

“We can remember a time when investors (and us, too) were ascribing 15x plus multiples to Singapore, even when its past EBITDA growth slowed given capacity constraints there.”

LVS now practically depends on Marina Bay Sands, an iconic integrated resort that sits on a 570,000 sqm waterfront site of Marina Bay in Singapore. Singapore boasts a practical COVID-19 vaccine policy and travel curb ease, effectively inviting premium mass players back on casino tables. Greff forecasted that the MBS property will bring in $1.2 billion in terms of a one-year forward annual property level EBITDA rate.