Las Vegas Sands (LVS) has demonstrated ‘resilience and growth’ in its second-quarter 2024 performance, with the group to further leverage future property renovation completions in Macau, a dispatch by Fitch’s CreditSights indicates.
‘The company’s successful post-pandemic recovery in Macau and sustained strength at its Marina Bay Sands property in Singapore have brought leverage close to pre-pandemic levels. This financial stability has recently restored the company’s investment-grade status’, a dispatch by the brokerage highlighted.
LVS reported $2.8 billion in revenues for the second quarter of 2024, marking a 9 percent year-over-year increase. The adjusted EBITDA for the quarter was $1.1 billion, up by 10 percent year-over-year. The growth was driven by strong demand in Singapore and continuous improvements in Macau.
In Macau, EBITDA improved by 4 percent year-over-year as the region continued its recovery from the pandemic, despite drags from ongoing renovation work which has shuttered The Londoner’s casino.
Singapore saw an even stronger performance, with EBITDA growing by 19 percent year-over-year, fueled by a surge in travel and tourism.
‘The company had a solid 2Q24, on the back of strong and resilient demand in Singapore. While YoY trends in Macau have decelerated as the region is a year and a half into its post-pandemic recovery, we continue to see incremental improvements, despite disruptions from LVS’ renovation efforts (most notably at the Londoner)’, CreditSights added.
‘Looking ahead, we expect to see additional leverage improvements as the recovery in
Macau continues to mature and renovations eventually come to fruition (projected in late 2024/early 2025′.
Future developments
Considering the future, CreditSights analysts expect LVS to further leverage improvements as Macau’s recovery matures and renovations are completed.
‘The company also has a notable pipeline of projects, including the MBS expansion, potential opportunities in New York, and long-term aspirations for new markets in Thailand and Texas,’ the brokerage underlined.
LVS completed Phase 1 of its Marina Bay Sands renovation and has commenced Phase 2. The expansion of Marina Bay Sands is projected to start in mid-2025.
Still, renovations have impacted 2Q24 results, particularly the Londoner Grand casino, which was closed for part of the quarter. The Sheraton Grand’s conversion to the Londoner Grand and ongoing work at the Cotai Arena also continue to impact the bottom line.
Renovation disruptions are expected to peak in Q3 2024, with the new Londoner Grand casino reopening, increased suite capacity, and the Venetian Cotai Arena anticipated to be operational by December 2024.
LVS ended 2Q24 with $9 billion in net debt, a slight increase from $8.9 billion at the end of 2023, but a decrease from $9.7 billion at the end of 2022.
Still, CreditSights indicated that LVS’s recovery in Macau is ‘maturing’, with gross gaming revenues and visitations flattening compared to 2019 levels.
As for Singapore, LVS has completed Phase 1 of its $1 billion Marina Bay Sands suite renovation and refurbishment program.
Phase 2, estimated at $750 million, is expected to be completed by 2025 and will include 544 redesigned rooms, additional suites, and enhancements in gaming, dining, entertainment, and retail offerings.
For 2024, LVS plans to spend approximately $1.5 billion on capital expenditure, including $600 million for Marina Bay Sands, $700 million for Sands China, and $225 million for maintenance and other projects.
The $700 million for Sands China is part of Phase II at the Londoner, involving the conversion of the Sheraton hotel towers to Londoner Grand and the addition of new attractions.
Sands China has committed up to $2.7 billion in capital spend, primarily on non-gaming initiatives, as part of the concession re-bidding process. This includes an additional $700 million commitment if Macau’s market-wide annual gross gaming revenues reach or exceed MOP180 billion ($22.5 billion) within the first five years of the concession contract. Given the current GGR trends, this is almost a certainty.