Fourth quarter earnings season kicks off on Wednesday when Las Vegas Sands reports their results.
LVS is an interesting company to begin as CEO Sheldon Adelson and other executives can talk about a variety of issues:
• Macau and whether the revival of gaming revenues are helping the bottom line and is sustainable.
• Las Vegas, and whether all the optimism about the market is carrying forward into plus-business early in the New Year, and for bookings in upcoming months.
• Regional gaming. Although not a regional player, LVS does have a casino in Pennsylvania, so has some insight into that market segment. A better take on regional gaming will come on the following week when Penn National reports.
• The Trump administration. Adelson no doubt will be asked on his quarterly investor conference call about his expectations for the new president, especially as that relates to online gaming. Remember, attorney general nominee Jeff Sessions says he will review the Obama administration decision that the 1961 Wire Act does not ban iGaming, which no doubt delights anti-online gaming Adelson.
• Japan. Now that Japan has finally agreed to legalize casinos, what action is taking place to help shape implementing legislation?
All of that should make for an informative kick-off to earnings season.
In Macau, LVS and Wynn are expected to report considerably higher revenues thanks to the opening of Parisian and Wynn Palace.
Analyst Kenneth Fong of Credit Suisse, for one, expects solid results. Below are his EBITDA forecasts for Macau casino operators with percentage changes over last year, in local currencies:
Melco Crown $284 million + 40 percent
Wynn Macau $220 million +37
Galaxy $2.883 billion +16
SJM $819 million +15
Sands China $626 million + 9
MGM China $151 million + 9
However, results compared to the third quarter are mixed, with Sands China and SJM likely to have been up just 1 percent and MGM down 8 percent because of low table win rates, Wynn up 25 percent thanks to VIP play and a full quarter of Wynn Palace, and MPEL up 12 percent as Studio City continues to ramp up, Fong said.
If Fong is correct, the outlook in Macau becomes much rosier than it’s been in several years, which is especially important to Wynn, the American company with the greatest reliance on the market.
And, while the focus continues to be on gambling, Macau is starting to generate more non-gaming visitors, perhaps finally moving toward the oft-stated goal of being more of a Las Vegas-like tourism destination.
Las Vegas, meanwhile, is also building more non-gaming revenues. The new arenas planned and built, the continued development of convention facilities, and the continued boom in international travel, especially from China, all suggest that LV is hardly a mature destination.
That leaves us with U.S. regional casino markets and slot machine companies.
In both cases, the stories may be more about execution than big trends, though there is always interest in whether the U.S. replacement cycle is about to accelerate for suppliers.
For a longtime, regional operators have focused on costs and marketing efficiencies. Now the questions will be on how companies plan to accelerate profitable growth.
Two exceptions might be Boyd and Eldorado.
Boyd, with its recent purchases of three Las Vegas locals casinos and its big presence in downtown Las Vegas, is playing the big trend of the local economy’s boom.
Eldorado has its own acquisitions over the past couple of years and its pending purchase of Isle of Capri, as continuing margin improvement stories.
