Marina Bay Sands (MBS) is coming off a quarter in which it generated adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $432 million, but at least one analyst believes the Las Vegas Sands (NYSE: LVS) venue can do even better.
In a recent note to clients, CBRE Research analyst John DeCree said MBS can continue notching impressive financial performances because Chinese visitation to Singapore is just half what it was prior to the coronavirus pandemic. As that percentage increases, the city-state’s two integrated resorts — Genting’s Resorts World Sentosa is the other — should benefit.
Moreover, ongoing construction disruption on the casino floor is coming to a close and 200 higher quality suites are coming back online, allowing MBS to drive pricing and cater to higher value customers,” wrote DeCree.
Marina Bay Sands, which is LVS’s lone property outside of Macau, is one of the most profitable casinos in the world and vies with Venetian Macau — also a Sands venue — for the top spot.
Marina Bay Sands Has Room to Run
DeCree’s assessment that Marina Bay Sands has upside potential appears to be spot on. On Sands’ recent second-quarter earnings conference call, CFO Patrick Dumont noted the operator is making significant investments at the Singapore casino resort.
Those expenditures include enhancements to Towers 1 and 2. Those improvements haven’t been fully ramped up as of yet and when that happens, it could drive improvement to the property’s margins and EBITDA.
“Our biggest suites, so our 200 multi-day suites are the last to come online. So that’s what’s going to come in this quarter and the next quarter. So the full earnings potential of the renovated Tower 1 and Tower 2 will not really be reached until those suites are online. So we’ve been operating without them,” said Dumont on the call.
With the $432 million in second-quarter EBITDA, MBS is on track to reach Sands’ goal of $2 billion in annual EBITDA this year. Gross gaming revenue (GGR) derived from mass market bettors was $580 million in the June quarter – a 36% jump from the same period in 2019.
Sands Bullish on Singapore
While Las Vegas Sands is often viewed as a Macau story, there’s no denying the importance of MBS to the overall investment thesis. Nor is there denying the operator’s commitment to Singapore. Dumont noted Sands has “very strong feelings about the future success of” the city-state.
The market’s “changed for the better. We’re investing a lot and we’re creating what is arguably the best product we ever had. And the customer response is very strong, but we’re mid-flight in that,” he added.
Marina Bay Sands is an essential part of Singapore’s business and leisure travel industries and Sands benefits from its presence there. Last year, the city ranked ninth in the world in terms of tourism spending, according to the World Travel and Tourism Council (WTTC).
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