Why this major casino operator is in a league of its own and doubling up its fortune with monster hands…
You know the saying… “Always practice what you preach.”
Often times, this is far easier said than done, but nowhere is this mantra more apparent than in today’s casino industry.
Casinos can be absolute cash cows.
The razzle and dazzle of glitzy gaming floors lure gamblers to plunk down cash for a chance to win more back – which of course they usually don’t.
But whether or not they win, the thrill and excitement of betting hooks people in, virtually ensuring that they’ll always be back for more.
For decades, the casino industry in America thrived off of the huge gaming revenues generated from places like Las Vegas and Atlantic City.
Then companies began expanding into Macau more than a decade ago to try and attract the new breed of wealthy Chinese gamblers. Needless to say, the big bet has paid off immensely.
Even after the global recession crippled the industry, especially in the US, casinos that built properties in Macau were able to easily offset huge financial losses suffered in places like Las Vegas and Atlantic City.
Gaming revenue on the Vegas Strip, for example, dropped dramatically last year, plunging to $5.02 billion from $6.05 billion in 2012.
In fact, today the US market is now largely an afterthought when it comes to new investments.
Meanwhile in Macau, according to Citi analysts, full-year growth for the gaming business could soar as high as 22% in 2014, which would eclipse 2013’s already impressive expansion of 18.6%.
But besides Macau, there are other Asian destinations that are slated to attract hordes of Chinese gambling junkets, namely Taiwan, Japan, and Singapore.
The Other Head Of The Asian Dragon
Singapore in particular, is fast-becoming the next playground for big money spenders.
It boasts a bevy of Michelin-starred restaurants and is home to the world’s only nighttime Formula 1 race.
And at the moment, it is home to 2 multi-billion dollar casino resorts.
But unlike Macau where non-gaming revenue only comprises a measly 10% of the casino capital’s total haul, non-gaming activities from Singapore’s properties generate a quarter of their revenue.
Singapore’s business model is largely based on tourism, with gambling merely being one of its many entertainment pillars, including amusement parks, world-class dining, and shopping.
Although this formula may not generate the same kind of revenue that Macau does, Japan and Taiwan casino regulators are keeping a close eye on Singapore’s gaming business, as they prefer not to be overly reliant on a single revenue source.
That kind of diversification appears to suit one casino giant just fine…
Top Casino Stock To Buy Today:
Las Vegas Sands (NYSE:LVS) has a major presence in Asia.
It currently has 3 casino properties in Macau: Sands Macau, Venetian Macau, and Sands Cotai, along with a slew of smaller, non-gambling hotels.
A fourth casino hotel, the Parisian Macau, is scheduled to open in late 2015.
In the first quarter alone, over 17 million visitors came though an LVS property in Macau. In the process, patrons collectively spent more than $4 billion — a record achievement for Sands.
EBITDA for LVS’ entire property portfolio grew around 50% year over year to $940 million, mostly on the back of its Macau casinos.
Net earnings were 36.6% higher than a year ago, resulting in a record Q1 EPS of $0.97.
Just in gaming alone, revenue growth for its Macau casinos in Q1 climbed by over 40%.
Across the Pacific, Sands’ properties in Las Vegas were predictably dreadful…as revenues plunged more than 31% from the same quarter a year ago.
Even with its lone property in Singapore, the Marina Bay Sands, business has been very healthy. Its 2,500 rooms are consistently at a 99% occupancy rate, and visitors helped it generate an adjusted EBITDA of $435.2 million in the last quarter.
Already seeing a 43% dividend appreciation year over year, and a stock that’s soared 63% in the last 10 months, Las Vegas Sands is a company on a hot streak.
The amount of money being generated in Asia can’t be understated for LVS or any other major operator. As Taiwan, Japan, and even Vietnam are on the cusp of green lighting gaming, LVS has its hands firmly on its chips and is ready to go all-in at a moment’s notice.
The future is bright for this company.
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