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Leading international developer of multi-use integrated resorts, Las Vegas Sands Corp. (LVS - Analyst Report) recently reported first-quarter 2013 adjusted earnings of 71 cents per share, outperforming the Zacks Consensus Estimate of 66 cents by 7.6% and the comparable year-ago quarter’s earnings by 1.4%. The upside in earnings was caused by the company’s strong top-line growth and operational efficiency.

Quarterly net revenue climbed 19.5% year over year to $3.3 billion, in line with the Zacks Consensus Estimate. The rise in quarterly revenues was aided by the company’s strong Macau business and growing Las Vegas business.

The operating margin has declined nearly 58 basis points (bps) to 25.0% in the first quarter. The decrease was mainly attributable to higher depreciation and amortization as well as development expenses.

Consolidated adjusted property EBITDA (earnings before interest, taxes, depreciation and amortization) surged 9.4% year over year to $1.2 billion.

Property Level in Detail

U.S.BUSINESS

Las VegasOperations(The Venetian Casino and The Palazzo) 

Net revenue from the Las Vegas operations increased 7.0% year over year to $411.5 million. Higher rooms, food and beverage as well as convention, retail and other revenues and growing RevPAR pushed up the segment’s sales during the quarter. Adjusted property EBITDA declined 2.1% to $113.4 million offsetting the rise in the table games win percentage.

Sands Bethlehem, Pennsylvania

Sands Bethlehem in Bethlehem, Pa. opened the first phase of its facilities for business on May 22, 2009. Net revenue at Sands Bethlehem was $122.9 million in first-quarter, up 6.3% year over year, driven by a 5.6% and 28.6% rise in casino revenues and RevPAR, respectively as well as a higher occupancy rate.  Adjusted property EBITDA increased 8.7% to $29.9 million.

ASIABUSINESS

MacaoOperations

Las Vegas Sands’ integrated resort properties and other assets in Macao are owned and operated by Sands China Ltd., which is a majority-owned subsidiary of the company.

During the quarter, net revenue at Sands China of $2.02 billion jumped 39.3% year over year. Adjusted property EBITDA amounted to $626.4 million, up by a massive 39% from the year-earlier quarter.

The company’s Macao business comprises of the following resorts:

Sands Macao 

Sands Macao revenues were down 11.1% to $310.3 million due to an 11.3% decline in casino revenues and a 2.4% and a 1.3% drop in average daily rate (ADR) and RevPAR, respectively.

The Venetian Macao 

Net revenue increased 12.9% to $872.2 million at The Venetian Macao, driven by a rise in traffic and increased casino revenues. However, occupancy plunged 180 bps to 91.6% and RevPAR fell 7.0% to $212 million at Venetian Macao.

Four Seasons Macao

Moreover, revenues at Four Seasons Hotel Macao and Plaza Casino dropped 25.5% to $223.2 million as casino revenues declined 27% year over year.

Sands Cotai Central

On Sep 20, 2012, the company successfully unveiled the second phase of its Integrated Resort offering – Sands Cotai Central - at the centre of the Cotai Strip after opening the first phase of Resort offering on Apr 11, 2012. Net revenue at Sands Cotai Central was $587.2 million.

We believe that facilities of Sands Cotai will drive additional visitation in Macao and will further boost Las Vegas Sands’ market share in Macao with its high gaming potential. The property witnessed a footfall of nearly 3.4 million during the first quarter.

MarinaBay Sands, Singapore

Revenue at Marina Bay Sands, which made its debut in April 2010, dropped 6.3% to $794.9 million during the first quarter with lower Rolling Chip win and casino revenues. Sands enjoyed RevPAR growth of 11%, driven by a higher average daily rate.

Our Take

Las Vegas Sands has benefited from the continued improvement in the Macau business. The company’s Las Vegas business is also recovering steadily. However, the company’s Singapore business remains sluggish. Further, the company’s upcoming project at Cotai will also face extreme peer pressure from several Chinese casino operators.

Another casino operator, Wynn Resorts Ltd. (WYNN - Analyst Report) reported first-quarter 2013 earnings that were ahead of the Zacks Consensus Estimates despite that fact that its revenue was just in line with the same.

Las Vegas Sands currently carries a Zacks Rank #2 (Buy). However, other casino operators such as Monarch Casino & Resort Inc. (MCRI - Snapshot Report) and Multimedia Games Inc. (MGAM - Snapshot Report) are better placed at the moment with a Zacks Rank #1 (Strong Buy).

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