Las Vegas Sands Corporation (LVS) is an integrated resort developer that offers world-class casinos, entertainment, restaurants and convention facilities. The company's properties include The Venetian, The Palazzo, Sands Bethlehem, and Marina Bay Sands located in Singapore's downtown Marina Bay district. The company also majority owns Sands China Ltd. Sands China Ltd currently owns an array of properties on Macao's Cotai Strip, including The Venetian Macao, Sands Cotai Central, and the Four Seasons Hotel Macau. Sands China Ltd also owns Sands Macao on the Macao Peninsula. Below I will outline why Las Vegas Sands receives my buy recommendation for 2013.
The Macao Aspect
Macao, currently the world's largest gaming market, set record high revenues in December at 28.25 billion Macao Patacas or $3.54 billion USD. This was an unexpected increase of 19.64% over last year's December revenues. In the Third Quarter Report, the company reported its Macao market share grew substantially to 19.3% during the quarter compared to 14.3% during last year. This increase reflects a market share growth of 35%. The company reported it opened the first Sheraton Macao Hotel tower in 2012 and expects to finish the second Sheraton Macao Hotel tower in early 2013. Once the project is completed, the company will have 9000 rooms in Macao's Cotai Strip. The expansion of properties in Macao is highly controlled by the government, and it's expected this project will be the last in Macao for the next couple of years. Market share and earnings will continue to rise as Sands China completes these projects and the Macao gaming market continues to see strong growth.
China's Economy Continues to Look Strong
The World Bank recently reported that Chinese growth will recover in 2013 to an estimated 8.4%, which is 0.3% greater than the last estimate. World Bank cited government stimulus, monetary easing, and an upswing in the business cycle as the reason for the change in estimates. I believe Macao casino companies have been discounted by investors due to fears of a slowing economy in China. As lost investors return to the China growth story, I believe we will see them move into LVS and other Macao casino companies.
Long Term Technical Analysis
The chart pictured above is the weekly candlestick for LVS. Ichmoku Clouds were layered over the chart and a RSI Indictor was placed on the bottom. Ichmoku clouds were published in the 1960s and are the product of a Japanese journalist named Goichi Hosoda. The light purple area is called the cloud. When the price is above the cloud, it signals that the security is currently in an uptrend, and when the price is below the cloud, it signals the security is currently in a downtrend. As seen above, LVS broke through the cloud in this week's candle and reversed the downtrend signal. As you may also notice, there is a green line (conversion line) and a blue line (base line) that follows near the cloud. When the conversion line breaks above the base line, this is a bullish signal for the security. I highlighted this event on the chart above. The RSI is also currently in an uptrend, but not yet overbought, which is also a bullish signal. In addition to these two indicators, LVS has made a strong upward move within the last two days and has broken the trend line resistance (orange line).
Las Vegas Sands is well-positioned to benefit from both growth in Macao and China. In 2012, LVS was able to fortify its foothold in Macao through the addition of the first tower in the Sands Cotai Central resort. In 2013, the fortification will continue through the completion of the second tower. China's economy continues to look strong, which will support revenue growth rates in Macao. Lastly, the long term technical view is very bullish. I see shares returning to 2012 highs set at $62.09 in 2013.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.