HONG KONG, July 22 (Reuters Breakingviews) - Las Vegas Sands’(LVS.N) new boss is shaking up the $38 billion company built by the late Sheldon Adelson. Chief Executive Robert Goldstein took the helm at the end of January following the death of the group’s famous founder. On Wednesday, he revealed his first full quarterly results. Covid-19 may have crippled earnings, but Macau’s gradual recovery and Goldstein’s bold online plans hint at a new direction for the venerable casino empire.
A return to robust financial health is still some way away. Beijing’s tight pandemic restrictions have meant many mainland Chinese cannot secure visas to Macau, while a travel bubble with neighbouring Hong Kong has yet to take off. Visitation numbers in the three months to June hovered at around a fifth of 2019 levels. As a result, the company’s total adjusted EBITDA slumped to $244 million in the quarter, compared to $1.1 billion before the pandemic.
Even so, Chinese gamblers look primed for so-called revenge spending. Sands premium mass market punters laid down bets worth around 60% of their wagers in the same period of 2019. Meanwhile, shoppers are splurging more on luxury goods at Sands’ Macau malls compared with before the pandemic, the company says. Elsewhere, its Marina Bay resort in Singapore has proven relatively resilient over the past year, though a fresh virus outbreak in the city-state may change that.
After confirming long-anticipated plans to divest the company’s American casinos in March, Goldstein is focusing on new ventures. His predecessor may have detested online gambling, but the Sands boss earlier this month unveiled plans to build a digital gaming investment team. It’s a promising bet that U.S. watchdogs will further relax e-betting restrictions. Competitors such as Wynn Resorts (WYNN.O) have already taken a flutter on virtual ventures, while more mature online operators are booming since last year’s lockdowns.
Proceeds of roughly $6 billion from Sands’ U.S. assets sale will give Goldstein a deep war chest. That should allow him to steadily build an online business from scratch, suggesting investors looking for quick returns will be disappointed. Since Goldstein’s official appointment, Sands shares have rallied as much as 25% but are now slightly below January levels. As with poker, awaiting a good hand requires patience.
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- Las Vegas Sands on July 21 reported adjusted EBITDA of $244 million in the quarter ending in June, compared with a loss of $425 million a year earlier. Revenue for the same period reached $1.2 billion, compared with $1.1 billion a year earlier.
- The company said that mass market gaming revenue for the quarter in Macau represented 26% of 2019 levels, whilst its premium mass market gaming revenue recovered to 57% of 2019 levels. Luxury retail sales at its Macau properties surpassed 2019 levels.
- Macau’s visitor numbers for the same period reached 22% of 2019 levels.
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