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Las Vegas Sands Is Only Sands Now And It's The Right Move

Mar. 04, 2021 10:26 AM ETLas Vegas Sands Corp. (LVS)18 Comments
Khen Elazar profile picture
Khen Elazar


  • Las Vegas Sands is leaving Las Vegas and it's a good move.
  • The sale will allow the company to focus on its fastest-growing business segments.
  • While the uncertainty is lower, and the direction is good, I am still uncomfortable with investing in the company right now.


Almost six months ago, I explained why I am not buying Las Vegas Sands (NYSE:LVS) just yet. The return potential back in November was extremely high, yet the risks were high as well. Las Vegas Sands was a highly leveraged company, with declining revenues, and there was still no timeframe for the vaccination across the world. The company has eliminated its dividend, withdrew its outlook, and it seemed like it doesn't matter how well the company is run, it will have to deal with this black swan.

As an investor, I am scared of uncertainty, and I understand that on many occasions, I will let go of potential returns to invest in less risky investments. However, as we see the business environment in the world, we see a decline in the level of uncertainty, and some optimism, as the IMF projects that China, Las Vegas Sands main market, will grow 8.1% in 2021.

I followed Las Vegas Sands as I used to own it for years, and waited for the uncertainty level to decrease, which will allow the company to reinstate its dividend, and the business to return to its usual operation. Sheldon Adelson passed away and forced a change in leadership during this already challenging time for the company, but as the vaccines are distributed, traveling will grow and Las Vegas Sands will have a better business environment.

Another uncertainty was its business plan. The company was well diversified across the United States, Singapore, and China. The business in China was booming and growing very fast up until Covid hit, its Las Vegas business reached an all-time high EBITDA in 2019, which was still only 10% of the entire business.

The company has announced that it's focusing on its Asian business as it sold its Las Vegas properties

This article was written by

Khen Elazar profile picture

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (18)

Blackstone makes $6.2B offer for crown.
@Faustina2 that’s fine with me
Near late March, Goldstein, should be stepping up to the plate, time for the first foray into Online Gambling to be announced. Purchase a % of 888, 33% of the company and partner with 888 to create a Sands Platform. Spend $600 MM to achieve this goal. Cheaper than purchasing a company.
LVS gets to play both ends of the game that way.
SA vision of the past was to expand and grow the company before his vision became sedentary. Asia is the future growth reaching a population of three Billion compared to 360 Million people of USA.
The utilization of $600 MM towards the construction financing of the final tower at MBS.
Followed by the purchase of Crown Resorts for $5.5 Billion (Wynn offered $7.1 in March 2019) which should be the next step of growth leveraged $1.8 Bn equity versus the remainder of the purchase attributed to a mid term of debt.
The following step would be the purchase of /and development of an online Asian Sports book platform for the Ten Casinos in Asia and One Casino in England for an expenditure of $1 Billion.
The remaining funds from the sale of the Vegas properties- $1.65 Billion would provide for the equity portion for the development of two more casinos in a choice of multiple countries. Presumably the seller financing is short term of 3 years and those funds of $1.2 Billion could be used against debt or future growth.
Thus by pursuing this growth vision by mid decade, the Sands will have annual revenues of $20 Billion with $7 Billion in EBITDA. IMHO dividends will be gradually reinstated in 2022 and half of the future EBITDA will be allocated as dividends and buybacks. Thirty-five percent of remaining EBITDA will be attributed for debt repayment and interest payments. The remaining amount from the Cash Flow for new Capex expansion.
That is real vision that should be espoused, not the drivel of above.
One of the best run gaming companies with continued focus on ROI....
cowboy-az profile picture
We the number of times you mention your fear of "uncertainty", I'm thinking you may want to look into to treasuries, or gold bars under the bed, instead of LVS..
@cowboy-az if you are afraid by G Bonds or better play roulette certainly you will lose
If i was Mr. Goldman I would buy Draftkings. It's clear to me every state in America will approve sports betting. They need the revenue to pay for there bad decisions. What is the monthly cost to open a huge casino over an app?
Secular_Income_Driven profile picture
Sands cashed out at an opportune time with markets dropping. I think they will surprise everyone and not reveal their grand vision until it's executed. Could they try to buy Melco? Yes. Far more likely, would be a splash into sports betting market. Keep in mind, Sands can still monetize its valuable retail space in MBS. That's estimated to be worth another $6B I believe. The mall sale, combined with Vegas sale and cash on books, leaves enough cash to do something monumental, even taking out a player like Draftkings, especially if markets keep pulling back. Why do I think that's possible? Not long ago, they talked about looking into building a Texas casino. Or opening a Brazil casino. Those are other options, but I have a feeling online could be in play.
taskassistant profile picture
@Secular_Income_Driven Business in USA is dead. Biden killed them. Any change from the massive socialist agenda gets billions $$ from Soros to rape, pillage, protest,
firebomb police and destroy our cities. My hope is his black heart gives out in the next 3 years. Leaving USA is a forward vision that many corporations will do. Along with low income, increasing poor immigrant populations and stranglehold on upper middle class. Gambling monies will be gone. Democrats have proven their canabalistic true nature.
Debt at $14 Billion at 4%, versus Debt at $9.5 Billion at 6% is the same interest payments.
Buybacks only help the Adelson Family to achieve greater control.
Taking the monies and leveraging growth will provide an extra Cash Flow within two years. Maybe this does not fit the authors immediate satisfaction. Similar to the days where monies were spent with the SCC development.

The short terms solution is to purchase Crown Resorts for approx. $5.5 Billion to $6.25 Billion.

Invest $1 Billion into an Asian Online Business. Stop looking into the USA, and expand strictly in Asia.

After the license is extended in Macau. Than Sands either purchases Melco, or builds two IR in Thailand or Vietnam/Cambodia or the Philippines from the extra funds.

In my opinion investing only in growth projects, stop trying to appease the investors with buybacks of large amounts or in the restoring of the dividend at the past rate.

Placating investors with a token dividend of .125 a quarter may be a reasonable start, I just don't think that appeals to investors, they prefer a concrete vision
@jensan96 Cash is king, I would like to see the dividend return and then decide to reinvest here or elsewhere.
Khen Elazar profile picture
@jensan96 I agree about the need for a vision, but I think they'll return more cash to shareholders.
Were the upcoming Japanese gaming franchises even mentioned? This seems to be a huge hole in this article.
Khen Elazar profile picture
@JDoe20 Was mentioned. Hopefully, they will strike a deal for a good project.
@Khen Elazar believe LVS dropped out of competition for Japan license last May. And I was long until then.
Apple Dan profile picture
LVS withdrew from the running quite some time ago. It seemed almost certain that they would be developing an IR on a pier in Yokohama, but they pulled out saying the economics did not work for them. This might have meant that Japan was insisting on a domestic partner etc., and I'm sure they want to do it themselves, or possibly what the government would take from GGR.
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