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LAS VEGAS SANDS CORP.

(LVS)
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Leaving Las Vegas Is the Right Move for Sands -- Heard on the Street

03/04/2021 | 05:53am EDT

By Jacky Wong

Leaving Las Vegas may not be heartbreaking for Sands.

Las Vegas Sands on Wednesday announced that it will sell its properties in Sin City for $6.25 billion. Private-equity giant Apollo Global Management will take over the operations, which include the Venetian Resort and its convention center, for $2.25 billion while real-estate investment trust VICI Properties will buy the real estate for $4 billion.

The deal isn't exactly a surprise since Sands has been in talks to sell them for months, but it comes at a historic time for the company: Its founder Sheldon Adelson, who started building the gambling empire in the 1980s after making his fortune from personal-computer trade shows, died in January.

Losing both its founder and where it all began may tug at the heartstrings, but Sands got a good price. The $6.25 billion represents 12.8 times 2019 earnings from the properties before interest, taxes, depreciation and amortization. And 2019 was an exceptionally good year. Bernstein says Sands' business in Las Vegas likely won't get back to that level until after 2023.

Sands has actually been an Asia-centric company for a long time already: Las Vegas only accounted for 9% of Sands' Ebitda in 2019. It makes sense to redeploy cash into its casinos in Macau and Singapore to serve the nouveau riche in the region. One potential risk of staking it all on Asia: Sands' casino license in Macau is set to expire in 2022. A new tender for the licenses may introduce more unfavorable terms or new entrants to the market. U.S.-China geopolitical tensions also represent a risk, though so far American operators in Macau haven't been affected.

Sands also mentioned potential opportunities in online casinos, sports betting or regional casinos in Texas and New York City. Mr. Adelson was notable for his objection to online gambling so his death may open the door for the company to go into this fast-growing business, but it would face strong competition. Caesars Entertainment is buying U.K. bookmaker William Hill. Another U.K. bookmaker, Entain, rejected a bid from MGM Resorts, though the two already have an online-gambling joint venture.

It's no sure thing that Sands would find success in those new markets, but one thing is more certain: The company will probably return at least some of the proceeds to shareholders. Sands suspended dividends last year as Covid-19 hit, and the new cash would allow the company to resume payouts sooner.

Sands without Las Vegas looks like a smart move for the company and could pay off in the near term for investors--even if it doesn't have quite the same ring.

Write to Jacky Wong at JACKY.WONG@wsj.com

(END) Dow Jones Newswires

03-04-21 0553ET

Stocks mentioned in the article
ChangeLast1st jan.
APOLLO GLOBAL MANAGEMENT, INC. -0.33% 51.32 Delayed Quote.5.12%
CAESARS ENTERTAINMENT, INC. 1.27% 89.88 Delayed Quote.21.02%
ENTAIN PLC 0.80% 1639 Delayed Quote.43.54%
LAS VEGAS SANDS CORP. -2.61% 59.04 Delayed Quote.1.71%
MGM RESORTS INTERNATIONAL -0.50% 39.55 Delayed Quote.26.15%
S&P GSCI GOLD INDEX 0.49% 1039.765 Delayed Quote.-6.16%
SANDS CHINA LTD. 2.17% 37.75 End-of-day quote.10.87%
VICI PROPERTIES INC. 0.94% 30.15 Delayed Quote.18.24%
WILLIAM HILL PLC 0.04% 271.9 Delayed Quote.0.63%
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Financials (USD)
Sales 2021 8 544 M - -
Net income 2021 547 M - -
Net Debt 2021 11 744 M - -
P/E ratio 2021 93,0x
Yield 2021 1,37%
Capitalization 45 099 M 45 099 M -
EV / Sales 2021 6,65x
EV / Sales 2022 4,38x
Nbr of Employees 45 250
Free-Float 39,7%
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Technical analysis trends LAS VEGAS SANDS CORP.
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Mean consensus OUTPERFORM
Number of Analysts 17
Average target price 66,47 $
Last Close Price 59,04 $
Spread / Highest target 46,5%
Spread / Average Target 12,6%
Spread / Lowest Target -15,3%
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Managers and Directors
NameTitle
Robert Glen Goldstein Chairman & Chief Executive Officer
Patrick Dumont President, Chief Operating Officer & Director
Randy A. Hyzak Chief Financial Officer & Executive Vice President
Charles A. Koppelman Independent Director
Micheline Chau Independent Director
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1st jan.Capitalization (M$)
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TABCORP HOLDINGS LIMITED23.85%8 282
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SJM HOLDINGS LIMITED17.88%7 481