Las Vegas Sands (NYSE:LVS) experienced a minor setback with a 3% decline in its shares during after-hours trading following the release of its second-quarter results. The decline was attributed to concerns about potential lower dividend payouts and a delay in the construction of a fourth tower in Singapore. Nevertheless, experts remain optimistic about the company’s prospects, particularly in the Asian gaming market, where a recovery is underway.
The recent resurgence in Macao’s gaming revenue has caught the attention of investors. Sands’ Macao sales have shown significant improvement, reaching 76% of 2019’s pre-pandemic level, up from 54% in the previous quarter. The increase is largely attributed to a rebound in industry visitation, which has now reached 63% of pre-pandemic levels, compared to 47% in the last quarter. The company’s impressive adjusted EBITDA of 71% of 2019’s level, with a 33% margin, further solidifies its position in the market.
Industry experts are optimistic about Sands’ future performance in Macao, projecting its 2023 sales to reach the mid-70s of 2019’s level, an increase from the previous estimate of about 60%. Additionally, the gaming revenue forecast for the industry is expected to recover to the low-60s from the initial estimate of about 50%, signaling a potential full recovery by 2024.
Looking ahead, Sands (NYSE:LVS) faces a temporary delay in completing its fourth tower in Singapore as it finalizes terms with the government. However, analysts view this as a minor obstacle, considering the company’s successful track record in operating its existing resort in the country. The government is likely to be receptive to allowing the company to expand its footprint once negotiations are concluded.
Regarding shareholder returns, management has signaled a shift towards a more balanced approach between dividends and share repurchases. This decision has received mixed reactions from investors. While some might be disappointed due to Sands’ history of fully paying out net income before the pandemic, others view it as a positive move that can drive higher earnings growth and allocate more capital toward high-return-on-investment projects. Experts have taken a favorable stance on this shift, especially considering the growth opportunities in the Asian gaming market and the potential expansion into markets like Texas in the United States.
In summary, Las Vegas Sands (NYSE:LVS) continues to maintain a strong position in the Asian gaming industry, particularly in Macao. The ongoing market recovery and positive outlook for the future support a fair valuation of the company’s shares, making it an attractive prospect for investors.
Featured Image: Unsplash @ Sasha Kaunas
Author Faith Yakubu 
