Sands Sees Up to $5B Spend in New York, Eyes Thailand

Posted on: January 26, 2023, 01:50h. 

Last updated on: January 26, 2023, 04:34h.

Todd Shriber @etfgodfather Read More

Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Las Vegas Sands (NYSE: LVS) could spend $4 billion to $5 billion to develop a new integrated resort in New York, and the operator is eyeing Thailand as its next spot in the Asia-Pacific region.

Sands CEO Rob Goldstein commented on that effect late Wednesday during the company’s fourth-quarter earnings conference. The operator missed estimates owing to weakness in Macau. But that was widely priced into the shares, and the firm’s optimistic outlook, coupled with China’s recent reopening, prompted a spate of bullish price target revisions on the stock from analysts.

As for expansion, Sands is a major player in the highly competitive New York casino fray and finally confirmed long-running Thailand rumors.

We’re looking hard at Thailand and would love to have a presence there in future,” Goldstein said on the call. “Japan isn’t there and Korea has nothing viable to speak of today. So we’ll jump to New York, which is an extraordinary and unique opportunity because of the simple dynamic of a huge market with limited capacity. It’s probably the only place in the US where you have millions and millions of people and just a handful of casinos.”

Currently, the company’s portfolio has no US exposure, consisting entirely of five casino hotels in Macau and Marina Bay Sands (MBS) in Singapore.

Sands’ New York State of Mind

In New York, the Las Vegas-based gaming company faces a crowded field of entrants vying for what many believe is a single downstate gaming permit.

“We’re not looking to build a regional casino, but rather a true large hotel with spa, convention space, dozens of restaurants, a new theater, a huge entertainment feature — a transformational product that will positively impact the community and grow tourism,”  the CEO said on the call. “We’re not looking to be in this thing in a limited way. We’re all the way in. We think that if we do it, it’ll be transformational for the county we’re working in and something to be very proud of. It will draw outsized tourism into Nassau.”

The Sands boss also confirmed what many already know: At the city level, New York is the last, great untapped frontier for the domestic gaming industry.

“It’s an exceptional opportunity and won’t come along again, and I think it’s one-and-done. We’ve been trying to do New York for a number of years, and it’s finally someone’s opportunity. We hope it’s ours,” he added.

Analyst Enthusiasm for Sands Shares

With the help of strong earnings before interest, taxes, depreciation, and amortization (EBITDA) in Singapore and data suggesting tourists are flocking back to Macau for the Chinese Lunar New Year, at least seven analysts boosted price targets on Sands shares, helping extend a run in which the stock gained 57% over the past three months.

Following the relaxation of travel restrictions, it appears China’s pent-up demand is as strong as expected. In our view, management’s commentary around demand, visitation, and spend was also as good, if not better, than expected. LVS highlighted a higher quality of visitors across all segments and reiterated their view that the recovery will be led by premium, which the company’s portfolio is primely suited to capture,” wrote Macquarie analyst Chad Beynon in a note to clients on Thursday.

Beynon added that Sands should be considered a “serious contender” in New York because of the company’s track record with non-gaming investments, including meetings, incentives, conventions, and exhibitions (MICE).