A gaming analyst from Roth Capital Partners said in a report last week that the U.S./China trade war initiated by President Donald Trump may be hurting the share value of Las Vegas Sands Corporation, which is headed by one of the top supporters of Trump and the Republican Party, Sheldon Adelson.
The report cited the visitation boom in Macau in its price target of $69, a moderate increase over the February 7 price of $59.18.
“Room availability should be the primary driver of forward Macau market share in an accelerated mix shift to mass driven by visitation,” the report said. “However, LVS share price momentum may remain relatively muted until there is a constructive conclusion to the U.S.-China trade war given upcoming concession renewals. If there is a constructive conclusion, we believe LVS will be one of largest share price beneficiaries in the public markets…
“Dependent on a constructive conclusion to U.S.-China trade negotiations, we believe there is increased risk for LVS and other U.S.-headquartered operators with a Macau presence with regard to concession renewals. Several investors have noted Mr. Adelson’s relationship to President Trump as potentially increasing this risk specifically for LVS. Continued below.
“Our $69 price target is based on a sum-of-the-parts model which applies a multiple of 14.5x CY19 EBITDA to the Venetian Macau, Cotai Central, Four Seasons Macau and Parisian Macau, 13.5x to Sands Macau, 12x to its Las Vegas portfolio and 14.5x to its Singapore portfolio. We then subtract a less a blended multiple of corporate expense as well as net debt, divided by shares outstanding. Factors which could impede shares from reaching our target price include: 1) The company’s inability to maintain market share in Macau as additional capacity enters the market; 2) the company’s inability to successfully negotiate a concession extension in Macau and 3) the company’s inability to maintain its dividend structure.”
