Billionaire Adelson Sees Signs of Turnaround in Macau Gambling

(Bloomberg) -- Billionaire casino mogul Sheldon Adelson said he’s optimistic that recreational gamblers and tourists are helping business in Macau as Las Vegas Sands Corp. reported its mass-market gaming revenue in the Portuguese enclave rose in June for the first time in two years.

The company’s Macau unit, Sands China Ltd, rose as much as 6.7 percent, the most intraday since March 18, as of 10:25 a.m. in Hong Kong trading Tuesday. Sands China’s earnings before interest, taxes, depreciation and amortization fell 14 percent to $487.7 million in the second quarter, missing analysts estimates of $528 million. While profit was damped by weak revenue from high rollers, mass-market revenue reported the first month of growth since September 2014, according to the company.

“So I think stabilization appears to be here,” Adelson, Sands China chairman, said on a call with investors. “We’re very happy that there’s one month that hit the bottom and we have no reason to believe that that’s not going to continue.”

The emerging turnaround in Macau, the world’s biggest gambling center, is coming at an opportune moment. Despite the two-year drop in betting, the region is in the midst of a building boom. Wynn Resorts Ltd. is scheduled to open the $4.1 billion Wynn Palace, its newest resort, on Aug. 22. Sands is slated to open the $2.7 billion Parisian Sept. 13.

“We believe Sands China’s product offering is one of the best positioned to capitalize on
Macau’s paradigm shift,” to focus on recreational gamblers, wrote Sanford C. Bernstein & Co. analysts lead by Vitaly Umansky in a note Tuesday.

Umansky rated the stock as outperform, citing its portfolio of hotel, retail and conference facilities will be “key drivers” in continuing to attract recreational gamblers and tourists, he wrote.

Shares of Las Vegas Sands rose as much as 4.1 percent to $49.75 in extended trading after the results were announced. The stock gained 1 percent to $47.80 at the close of regular trading in New York.

“Something good happened in June,” Rob Goldstein, Sands’ president, said on the call. “The gaming floors are busy, especially on weekends. Macau is morphing into the world’s greatest mass market. Hopefully we’ll see it for the rest of the summer.”

Sands, the casino operator founded by billionaire Sheldon Adelson, earned 52 cents a share in the second quarter, excluding some items, the Las Vegas-based company said in a statement. Analysts had been expecting 56 cents, the average of 14 estimates compiled by Bloomberg. Sales fell 9.3 percent to $2.65 billion, missing estimates of $2.75 billion.

• Sands China’s mass-oriented flagship Venetian Macao adjusted property ebitda fell 4.2 percent from a year earlier.
  
  

• Ebitda in Singapore fell 1.7 percent to $357 million.
  
  

Sands is the largest casino operator in Macau, the only part of China where casino gambling is legal. Betting there has been in a two-year slump amid a Chinese government crackdown on corruption that has prompted high rollers to cut back on conspicuous consumption. The market is showing signs of recovery, with the overall drop in betting moderating and visitor traffic on the upswing.

The Parisian’s opening is a “key inflection point” that gives it a competitive advantage with nearly 12,700 hotel rooms by the end of 201, according to Umansky of Sanford C. Bernstein.

“The positioning of the Parisian Macao caters well to both the current Macao market conditions and the long-term growth trends in Chinese outbound tourism,” Adelson said.

--With assistance from Rob Golum and John Lear To contact the reporters on this story: Christopher Palmeri in Los Angeles at cpalmeri1@bloomberg.net, Daniela Wei in Hong Kong at jwei74@bloomberg.net. To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Crayton Harrison at tharrison5@bloomberg.net, Dave McCombs

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