LVS to kick off Q3 earnings, with narrower loss expected

MBS

Las Vegas Sands will be the first of the major operators to report its Q3 results on Wednesday, providing a snapshot of how the recovery process from the pandemic is faring in three major gaming jurisdictions. 

The company, whose geographic spread includes properties in the U.S., Singapore and Macau, is expected to post a net loss of US$0.44 a share, reversing course from an adjusted profit of $0.75 in the prior year quarter, but significantly better than the loss in Q2 of $1.07.

According to the Zacks Consensus Estimate revenue is likely to come in at $867.4 million, indicating a decline of 73.3 percent from the year-ago reported figure. Judging by some other notable financial sources, the Zacks consensus may be overly optimistic. WSJ Markets pegs the likely loss at $0.69 and seems to indicate that sentiment towards the casino giant may have worsened over the past few months.

To be fair there has been a distinct shortage of good news. The company’s properties in all three locations are now open, but none have seen the sharp pick up in business that had been expected and the timeline for recovery seems to have been kicked increasingly down the road.

In Macau, Sands’ mass market focus, with its enviable supply of hotel rooms during good times, already meant it wasn’t the favourite to lead a rebound there. It needs a return to high volumes and so far that hasn’t materialized even though the borders with China have reopened. Most analysts are blaming the stringent entry requirements, including a negative Covid-19 test and opine that although visitor numbers have been steadily increasing, there certainly has been no flood.

The analysts’ favourites at present are Melco Resorts & Entertainment and Galaxy Entertainment, which have a strong focus on the premium mass market and thus hit a sweet spot between the high rollers, who haven’t come back in force and the large volumes.

Singapore has also proven disappointing. The island nation has not yet opened its doors to international travel, although a travel bubble is being discussed with Hong Kong. According to Zacks, the market is looking for revenue of about $220 million at Marina Bay Sands for the quarter, that’s a drop of 72.3 percent from the prior year.

For the Las Vegas operations, the consensus estimate for third-quarter revenues stands at $138 million, indicating a slump of 66 percent from the year-earlier figure. 

WSJ Markets data points to lower analyst confidence in LVS than three months ago, when 14 analysts polled had a buy rating on the stock, compared with just 12 at present. Those recommending a hold has risen from three to five.

Company executives will also be holding a conference call, which is likely to be more closely followed by analysts and investors than the results themselves. All are looking for the silver lining and whether there has been any significant change of course in the weeks after the close of the quarter, which included the Golden Week holiday.