evenue in Macau was up 28% to $2.53 billion, but when compared with 24% growth for the region overall, it's a little disappointing to see the company not take more share. Sands Cotai Central added to the company's exposure to Cotai, but gains there and at The Venetian Macau were offset by a 29.5% decline in gaming revenue at Four Seasons Macau and just 4.2% growth at the company's oldest Macau casino Sands Macau.
Singapore was where the truly terrible numbers were, with revenue down 8.9% to $659.8 million and EBITDA down 14.4% from a year ago to $258.8 million. Some of the losses can be attributed to bad luck, but VIP play was down 16.6%.
While results were below expectations and there are warts to point out, let's keep in mind that revenue did jump nearly 19% and the company still has prime locations in both Macau and Singapore. If investors sell off too far, the company's shares could become a far better value, which would be nice in an industry where values are hard to find.
The revenue rise was due to continued strength at its Macau properties. For 2013 as a whole, Sands reported record revenue of $13.77b, up 23.7% over 2012 and more than the annual gaming revenue totals of all the casinos in Nevada and Atlantic City combined. Sands’ full year earnings rose 25.6% to a record $4.76b, while net income set another record at $2.4b. Not for nothing did Sands chairman Sheldon Adelson (pictured) describe his company as “the global leader in integrated resort development and operation.”
As usual, Sands China led the company’s charge with revenue up 28.4% to $2.53b in Q4. Earnings rose 34.9% to $836.4m and profits surged 40.4% to $655.6m. For 2013 as a whole, Sands China revenue rose 37% to $8.96b, earnings rose 46.5% to $2.9b and profit rose 79.7% to $2.21b.
The Venetian Macao continued to impress in Q4, with record earnings of $433.4m (+30.1%) thanks to 40% rise in gaming revenue to $1.01b. Rolling chip volume was up by a third and VIP gaming hold rose slightly to 3.32%, above the expected range of 2.7% to 3%. Mass market gaming was the real star, with amounts wagered up 86.7% to a record $2.27b, overcoming a 4.7 point drop in win rate to 25.2%. Slot handle was up slightly to $1.3b, while hold fell 0.3 points to 5.2%. The Venetian’s mall revenue was up 21.9% to $56.7m.
Sands Cotai Central reported gaming revenue up 61.3% to $707.7m as rolling chip volume rose 72.7%, mass market table drop rose 80.2% and slot handle rose 40.8%. Mass win per table per day rose 111%, while mass table, slot and electronic table game (ETG) win per day rose 88.4%. The property reported earnings of $237.8m on revenue of $790.7m, reflecting a 30.1% margin.
Sands Macao suffered from gamblers going on a hot streak, with VIP, mass and slots win rates all in negative territory. Despite all this, gaming revenue rose 4.2% to $318.7m, but earnings fell 3.8% to $88m. The Four Seasons Hotel Macao and Plaza Casino saw earnings fall 14.4% to $76.8m, laid low by a 29.5% drop in gaming revenue.
Marina Bay Sands in Singapore also struck a bum note in Sands’ financial trumpet blast, with Q4 gaming revenue falling 8.2% to $504.6m and earnings down 14% to $258.8m. VIP gamblers wagered less and won more at MBS in Q4, with rolling chip volume down 16.6% and VIP win rate coming in at a disappointing 1.82%. Mass gambling volume rose 2.4% but win was essentially flat at 24.5%. Slots handle rose 5% but hold fell 0.2 points to 5.2%. The only positive momentum at MBS was room revenue, which rose 13.8% to $95.8m thanks to a 96.9% occupancy rate and a healthy average daily room rate of $425.
Sands’ stateside operations accounted for just 14% of the company’s total revenue pie. The Venetian and Palazzo properties in Las Vegas saw revenue rise 25.1% to $385.7m and earnings up 67% to $88.2m. Casino revenue was up a healthy 72.1% to $151.3m as table game drop rose 41.4% to a record $649.7m and win rate shot up 9.1 points to 21.8%. (That table drop was largely due to a record baccarat drop, proving that even in Vegas, Sands is still an Asian company.) Vegas slots handle rose 4.8% but hold slipped 0.4 points to 8.5%. In Pennsylvania, Sands Bethlehem reported revenue up 5.3% to $124.1m and earnings up 10.2% to $30.3m.
On a post-earnings analyst call, Adelson made it rain for shareholders, raising Sands’ recurring annual dividend 42.9% to $2 per share and issuing his traditional “Yay! Dividends!” cheer. Looking ahead, Sands says the Parisian resort being built on Cotai is on budget and on schedule to open in in late-2015. Construction has also started on the final tower at Sands Cotai Central, which will add a further 700 hotel rooms to Sands’ already market-leading 9k+ rooms when it opens in Q4 2015.
Adelson said Sands’ Q4 mass win in Macau grew 58.3% to a record $1.22b, the fourth straight quarter Sands has outpaced the overall market growth. It helps that visitation from China was up 10% in 2013, and visitation from provinces beyond Guangdong and Fujian provinces rose 15%. The further visitors are from home, the longer they stay in Sands’ hotel rooms; the average stay in a Sands’ hotel room rose from 1.3 nights in 2012 to 2.1 last year. Adelson believes the increased pace of infrastructure development on the mainland will only accelerate this trend.
With five properties in Macau under its management and a sixth under construction, Las Vegas Sands is riding the success of the growing Chinese market that should only get bigger with transportation infrastructure under way.
Macau is expanding the distance from which visitors are arriving, and the completion of the Hong Kong-Zhuhai-Macau Bridge in 2016 will remove one of the barriers that keeps the city’s convention industry from growing more rapidly.
Las Vegas Sands Chairman Sheldon Adelson said when conventioneers are able to drive to Macau in 20 minutes on the bridge from the Hong Kong airport instead of getting there by boat, the meetings industry should grow even more.
In addition, the Chinese government is building high-speed rail and in Macau, a light-rail system is under construction to make that destination even more appealing.
“It’s no wonder that analysts and journalists say we lead the market by far,” Adelson said in a conference call with analysts.
Although three properties, including Sands’ Parisian, are scheduled to open in 2015, Adelson isn’t concerned about market saturation, believing demand will grow.