Brokerage Bernstein rated shares of Las Vegas Sands (LVS) and its Macau-based subsidiary Sands China at Outperform, offering up 39% and 62% respectively on recovery expectations in its core gaming markets of Singapore and from Macau.
In a Monday note, analysts Vitaly Umansky and Shirley Yang noted that Singapore’s Marina Bay Sands – the crown jewel of LVS’ Asian portfolio – delivered better-than-expected second-quarter results with an EBITDA rate of 1.2. billion USD already approaching its pre-COVID peak of 1.7 billion USD.
With Singapore’s near-complete transition to Living with COVID, nearly all travel barriers and social distancing measures have now been removed, paving the way for a full recovery as the airlift to Changi Airport nears. pre-COVID levels.
“We expect business activity to continue to ramp up at MBS through the remainder of the year and into 2023,” the analysts said.
“We expect MBS EBITDA to reach more than 90% of 2019 in  and growing from there, [setting up] for a further increase once the Phase 2 expansion is complete and attracting more customers.
Bernstein has set a target price of US$53.00 for LVS shares from its price of US$38.75 at Monday’s close.
Sands China is seen as an even more compelling investment opportunity, with “the risk/reward for Macau over the next 12+ months looking very attractive with concession risks largely eliminated and a gradual reopening of travel to Macau as China comes out of Zero-COVID in 2023.”
Umansky and Yang note that Macau’s GGR is currently at its lowest – in July the SAR recorded the lowest monthly GGR figure since liberalization 20 years ago – but remain adamant that conditions are improving. will improve in 2023 assuming China relaxes its zero-COVID stance.
“Our long-term thesis is driven by the expected secular growth of Mass, with Sands well positioned to succeed in both premium mass (especially with a new product) and high-margin mass and retail, where he was always the first operator” they wrote.
“We are confident that Sands will maintain its leadership position in Macau by retaining around 30% market share, assuming a full recovery in travel by the end of . We plan [2024 and 2025] EBITDA should be higher than 2019.”
Analysts have set a target price of HK$28 for Sands China, currently at HK$17.28.
They also point to future upside potential given LVS’ strong cash position, although any major new investments in the near term seem unlikely.
“LVS completed the sale of its Las Vegas operations in February, with after-tax proceeds of $4.4 billion plus $1.2 billion in deferred payment,” they said.
“We don’t anticipate any major short-term investments outside of Singapore, but the liquidity and dry powder of LVS creates an investment option and potential return of capital for shareholders.”