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Las Vegas Sands Corp LVS

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Morningstar’s Analysis

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Economic Moat

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Capital Allocation

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Elevated Country Risk Premium Stands to Lower Our Wynn and Las Vegas Sands Fair Value Estimates

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

We plan to adjust our cost of equity higher for narrow-moat Wynn (Macao was 76% of 2019 EBITDA) and Las Vegas Sands (59%), to account for an increased risk premium tied to increasing Chinese government oversight in the Macao gaming industry. As a result, we expect to lower our Wynn and Las Vegas Sands $114 and $59 fair value estimates, respectively, by a high-single-digit percentage. While that would still leave shares of both operators in undervalued territory, investors should expect near-term volatility given the broader uncertainty surrounding the impact of China's social policies in the gaming and other sectors. We don’t plan to materially adjust MGM’s $39 fair value estimate, given just 22% of its prepandemic EBITDA came from Macao.

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Company Profile

Business Description

Las Vegas Sands is the world's largest operator of fully integrated resorts, featuring casino, hotel, entertainment, food and beverage, retail, and convention center operations. The company owns the Venetian Macao, Sands Macao, Sands Cotai Central Londoner, Four Seasons Hotel Macao, and Parisian in Macao, the Marina Bay Sands resort in Singapore, and the Venetian and Palazzo Las Vegas in the U.S. (which it plans to sell to Apollo and VICI for $6.25 billion). We expect Sands to open a fourth tower in Singapore in 2025. After the sale of its Vegas assets, the company will generate all its EBITDA from Asia, with its casino operations generating around 80% of sales.

Contact
3355 Las Vegas Boulevard South
Las Vegas, NV, 89109
T +1 702 414-1000
Sector Consumer Cyclical
Industry Resorts & Casinos
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Distressed
Employees 46,000

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