Las Vegas Tops Q3 View on Recovery in Macao Gaming Mkt.

Las Vegas Tops Q3 View on Recovery in Macao Gaming Mkt.
November 14, 2017

 
Aided by a strong recovery in the Macau gaming market, the hotel, retail mall, and gaming company Las Vegas Sands Corp. (NYSE: LVS) reported a 7.7% increase in the fiscal 2017 third-quarter revenues, compared with the corresponding quarter last year. Both earnings and revenue topped analysts’ estimates. Following the impressive quarterly results, the stock has climbed about 5% in the past one week to trade at $67 levels. We anticipate the stock to consolidate and rise further in the days to come due to reasons given below.

Total revenues in 3Q17 increased to $3.20 billion, from $2.97 billion last year. The third-quarter net income was $570 million, or $0.72 per share, an increase of $57 million from $513 million, or $0.65 per share, in the year-ago period.

Excluding pre-opening expense, development expense, impairment of assets, among others, the adjusted earnings in the July-September quarter 2017 was $607 million, or $0.77 per share, compared with $562 million, or $0.71 per share, in the similar quarter last year. Analysts surveyed by Thomson Reuters had anticipated Las Vegas to post earnings of $0.68 per share on revenues of $3.15 billion.

Segment wise, Casino revenue increased about $204 million y-o-y to $2.511 billion. Rooms revenue remained almost flat at $411 million, compared to last year. Food and beverage revenues were $198 million, an increased of $14 million from last year. Mall revenues rose to $160 million, from $147 million in the year-ago period. Convention, retail, and other revenues dipped to $128 million, from $141 million in the prior year period.

Property wise, the performance of casinos were as follows:

Venetian Macao revenue – $718m vs. $773m last year.
Sands Cotai Central – $474m vs. $518m last year.
Parisian Macao – $418m vs. $69m last year.
Plaza Macao and Four Seasons Hotel Macao – $147m vs. $161m last year.
Sands Macao – $143m vs. $167m last year.
Marina Bay Sands – $793m vs. $762m last year.
Las Vegas Operating Properties – $378m vs. $384m last year.
Sands Bethlehem – $148m vs. $147m last year.

Casino wise, Sands Macao, Las Vegas Operating Properties, and Plaza Macao * Four Seasons Hotel Macao reported a decline in table games win per unit per day. All other casinos recorded a revenue growth.

The room occupancy rate declined slightly in Venetian Macao, Sands Macao, Marina Bay Sands, and Sands Bethlehem. Other hotels reported an improvement in the room occupancy rate. The situation in Macao, the world’s largest gambling market, continues to improve. Thus, on the basis of impressive earnings and overall improvement in the gaming market, we forecast a continuation of the current rally.

The stock is trading above its 50-day moving average. Further, the Chande indicator is in the bullish zone. Thus, we forecast the uptrend to continue in the stock.

Las Vegas - Technical Analysis - 14th November 2017

In the current scenario, a call option would enable us to gain from the uptrend. We may buy a call option when the stock of Las Vegas trades at about $67 in the NYSE. Additionally, the option should not expire before a week.

Disclaimer: The trading analysis offered here is our opinion. It is not provided as trading advice, merely an indication of our trading plan. We cannot guarantee success and we encourage traders to incorporate a strong money management strategy to limit losses. Please use this article as part of your own research before formulating strategies prior to trading.

Andrew Wright

Prior to founding tradersasset.com in 2014, Andrew worked as a proprietary trader, then as a market maker. As a market maker, he traded options in over 100 stocks, he then began trading currency pairs in 2013. Andrew still actively trades both, and prides himself on educating and informing traders on the benefits of both Binary Options and Forex.


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