Las Vegas Sands' Q3 impresses Street, eyes Asia

LOS ANGELES Thu Oct 27, 2011 7:33pm EDT

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LOS ANGELES (Reuters) - Las Vegas Sands Corp (LVS.N) posted better-than-expected revenue in Asia and rode a rebound in U.S. growth on Thursday, calming fears that economic weakness would discourage leisure travel and gaming.

Sands' numbers helped dispel fears its Asian cash cow -- Macau -- would suffer if China slows or chokes off a lucrative flow of gamblers from the world's second largest economy.

In Singapore, investors were taken aback by a 37 percent surge in "VIP" or high-roller gambling volumes. Back home, its signature Venetian and Palazzo resorts on the Las Vegas Strip also outpaced Wall Street's expectations with 62 percent earnings growth.

Analysts say Sands heads into 2012 with few costly outlays. Its sole major expansion will be in Cotai Central in Macau, which the company hopes will help it catch up with rivals in the high-margin VIP or high-rollers' market segment, in which it admits it lags.

The shares of the company run by billionaire Sheldon Adelson rose 3.5 percent to $47 after closing at $45.40 on the New York Stock Exchange.

Adelson told analysts on a conference call he was keeping an eye on new development opportunities -- in particular if parts of Asia were to open their doors to gambling resorts.

"In Asia, which would be our first choice, it appears as though Korea and Japan are making louder ... and more urgent moves in the direction of legalizing federal gaming and integrated resorts," he said. "If one of those legalizes, the other one is going to do it in a heartbeat."

Macau, the only Chinese city to legalize gambling, has been a boon for Las Vegas Sands, Wynn Resorts Ltd (WYNN.O) and MGM Resorts International (MGM.N), which reports results next week. Rich gamblers from the mainland make up most of the visitors who flock to the former Portuguese enclave.

Analysts said the concerns, which surfaced in October and pressured the shares of the three largest U.S.-listed gaming companies, may have been overblown.

They cite an 18 percent surge in visitor arrivals to Macau, as well as a 39 percent surge in gaming revenues to almost $2.7 billion in September, according to official data.

"The Chinese are not likely to have a hard landing. They have more tools at their disposal and are more apt to use them," said Bernstein analyst Janet Brashear.

WIPING EGG FROM FACE

Sands, run by billionaire Sheldon Adelson, which derives most of its income from its Venetian Macau, Sands Macau and Marina Bay Sands casinos, reported third-quarter revenue of $2.41 billion compared with $1.91 billion a year earlier.

That exceeded forecasts for $2.34 billion, according to Thomson Reuters I/B/E/S.

Sands' U.S. operations -- anchored by the signature Venetian and Palazzo casinos in Las Vegas -- also fared well. Together, those two casinos drove a 62 percent surge in adjusted operating earnings to $94.3 million in the quarter.

That was dwarfed as usual by the Macau operation, which chalked up a comparable profit of $388 million, although up just 16 percent.

Sands' Singapore arm delivered $414 million, exceeding internal projections.

"It's very balanced across all markets," Brashear said. "It's now very geared toward volume growth."

Las Vegas Sands reported an adjusted net income of $444.8 million, or 55 cents a share, in the third quarter, compared with $265.2 million, or 34 cents a share, a year earlier.

That exceeded the average Wall Street estimate of 52 cents.

Longer term, Sands has lagged its peers in the VIP -- or high-roller -- segment in Macau and is spending to expand its footprint in that high-yielding market, with results expected to emerge fully only by 2012.

(Reporting by Edwin Chan; editing by Andre Grenon)

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