Las Vegas Sands Corp. (LVS)

Down 19% last month. They reported a disappointing quarter last Wednesday with weakness in Macau and elevated spending.

A few years ago, it sold off its remaining Vegas assets to expand in Asia with 5 casinos in Macau and 1 in Singapore. They just reported a top and bottom line beat, but shares were hit over disappointing margins in Macau. He doesn't like any gambling companies.

60% of EBITDA comes from Macau, which is recovering; she's bullish here because LVS has done a ton of renovations that completes this spring. Trades at 11x EBITDA vs. 14x historic. Is -20% the past year.

She bought it. They're spending a ton to renovate their casinos to end early 2025, and will regain their sinking market share. It's cheap wit the current EBITDA less than half of the 3-year average.

Sold it. They're revamping their hotels in China which is good long term, but will lose market share in the short term. Dead money.

China is reopening, tourism is jumping, but shares are depressed because the market is de-rating stocks exposed to China. But he expects them to receive its investment-grade credit rating back, reinstate its dividend and share buybacks. He expects a recovery, but doesn't know when. This company is operating well.

Hotel & casino sector will remain strong.
Travel demand will only get stronger as market recovers.
China demand also rising. 
Current share price is good time to buy.
Expecting further share price gains. 

Interesting company. Nice run since October 2022. Getting expensive. Be fairly cautious.

The sector has certainly recovered strongly, and EP in the quarter was 68% better than estimates. 
From three years of losses strong earnings are expected this year and next. 
We think the outlook is good. Our cold-water on the thesis would be (i) valuation. 
At 33X earnings, its well above historical averages in the 21X to 23X range (ii) Debt. At $10B (net) it is still more than 2X the highest annual cash flow of the past 10 years. 
Cash flow has been negative for the past three years. 
Debt increased by $4B during the pandemic years. 
We do expect this to decline with normalized earnings trends, but is a risk if results do not meet growth expectations and/or we see a recession. Overall, we would give it an 'OK' but higher risk rating. 
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Sold all US properties last year. Now a pure play on the high growth, Asian gaming market and China reopening. Leading market share. Macau is the Las Vegas of China, and gross gaming revenue is growing by triple digits. If you go into a casino enough times, you will lose money, and this means that the house will make money. Expects operating profit to grow by 600% this year. Reports tonight. May regain investment-grade credit rating, which could unlock the door to buybacks or reinstating the dividend. No dividend.

The consumer still wants experiences, and China is reopening. Macau too.