Las Vegas Sands to Continue Prioritizing Asia Following Adelson’s Death, Says Research Firm

Posted on: January 14, 2021, 10:06h. 

Last updated on: January 14, 2021, 11:26h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Las Vegas Sands (NYSE:LVS) will keep its operational focus honed on the Asia-Pacific region following the death of Chairman Sheldon Adelson, say analysts.

Rob Goldstein
Acting Las Vegas Sands CEO Rob Goldstein seen here in 2017. The company’s Asia focus isn’t going to change following Sheldon Adelson’s death. (Image: Las Vegas Review-Journal)

The casino mogul passed away Tuesday of complications from non-Hodkinson’s lymphoma. He was 87. Adelson was widely credited with being the first American gaming executive to see the potential in Macau, the lone Chinese territory where gambling is permitted.

He’d later expand that vision with LVS opening the Marina Bay Sands (MBS) in Singapore in 2010. At the time of construction, MBS cost $6.88 billion, making it the most expensive integrated resort on record. Today, it’s one of the most profitable gaming venues in the world.

We expect Las Vegas Sands to not have any material change in strategy. The focus remains developing Macau and Singapore,” said Bernstein analysts in a recent note.

Following a decades-long monopoly held by Stanley Ho, the Macau gaming industry opened to foreign competition earlier this century. Sensing massive potential with the special administrative region (SAR), located just a three-hour flight from a billion Chinese citizens, Adelson seized the opportunity.

Sands Macau debuted in 2004. Today, Sands China is the biggest operator in the world’s largest casino center, controlling five integrated resorts there.

Practical Business Sense

From an economic point of view, Sands remaining committed to Asia makes sense. In a normal operating environment when pandemics aren’t limiting travel, the company’s Macau and Singapore operations can drive 80 percent or more of revenue in any given quarter.

Following Adelson’s passing, there is talk that with Macau licensing renewal looming in 2022. It’s possible Sands China will sell an equity stake to Chinese investors as a gesture of good faith to Beijing.

Investors in other Macau companies with ties to the US are pushing for similar moves, arguing it would remove the overhang of concession risk. For now, it’s not clear if Sands China will proceed with a big equity sale to a local investor. But analysts believe such a move is easier to execute in the wake of Adelson’s death.

Should LVS proceed with selling the Venetian, Palazzo, and Sands Convention Center on the Las Vegas Strip, consensus wisdom is that some of the proceeds will be used to fund Asia-Pacific expansion. That sale price is rumored to be up to $6 billion. It could include mergers and acquisitions.

“We expect Las Vegas Sands to focus on investment of proceeds in high return-on-investment potential opportunities in Asia, or return capital to investors, and pay down some debt,” said the Bernstein analysts.

Other Opportunities on the Table

LVS is also interested in opening gaming venues in New York City and Texas plans Adelson signed off on before his death.

Interim Chairman and CEO Rob Goldstein, who is expected to retain at least one of those titles, and CFO Patrick Dumont, Adelson’s son-in-law, are rumored to be on board with those goals, with the caveat being a strong return on invested capital is mandatory.

Areas, where the two executives are likely to depart from their late boss, are iGaming and sports wagering. Adelson was stridently opposed to online gambling and never expressed much interest in sports wagering.

“We do not see Goldstein and Dumont as having a similar strong view,” said the Bernstein analyst.

Last week, just days before Adelson’s passing, news broke that Goldstein is holding early-stage talks on getting into the fast-growing sports betting business.