Citi: Las Vegas Sands Beats Estimates, Posts Record Results

Las Vegas Sands LVS reported adjusted EPS of $0.42, beating both Citi's estimates and consensus. However, net revenue of $2bn missed the Street, but was in line with Citi's estimates. Property EBITDA grew 142% to $739m. The record results were aided by above-average hold rates, which masked decreased volumes, particularly at MBS and Venetian Macao. Management expects to open 1,000 hotel rooms and one of two casinos at Sites 5 & 6 in Cotai by end-2011, but Citi maintains its conservative view and model a 2Q12 opening. Citi's view is conservative as it expects labor shortages to subside upon Galaxy's completion. Macau (MBS) generated an EBITDA of US$305.8m and a 54.6% margin thanks largely to the 3.11% VIP hold rate and its stringent cost controls. However, the major disappointment in our view was the ~20% QoQ fall in VIP rollings. At just 11% of 4Q EBITDA, Las Vegas's significance continues to diminish. Metrics across the strip provide mixed signals as to the recovery's strength but, with its high-end product, we see LV EBITDA growing 15% and 7% in 11 and 12. Citi has a $55 PT and Buy rating on LVS LVS closed Thrusday at $50.28