Monday, December 6, 2010

Las Vegas Sands (NYSE:LVS) Shouldn't Suffer from Macau Decision

Most commentators on the rejection of the application of Las Vegas Sands (NYSE:LVS) for what is identified as Parcels 7 and 8, as most weren't considering them in their valuations and outlook for the company, so there were no real surprises there.

Barclays (NYSE:BCS) noted, "The Macau Government's rejection of LVS land concession application for Parcels 7 and 8 is disappointing, but not a total surprise. More importantly, Parcels 7 and 8 were not in our forecasts or valuation for the company. We present our first thoughts on this news here; however, we have not yet spoken with the company. We will provide an update if our thoughts change following a conversation with management...Based on the letter received by LVS from the Macau government, the company has 15 days to apply to the Chief Executive of Macao for a review of decision and 30 days to appeal the decision to the Macau Courts.

"As of September 30, Las Vegas Sands has capitalized $102.4 million in construction costs on Parcels 7 and 8. Parcels 7 and 8 was originally designed to have 6,150 hotel rooms with Fairmont, Raffles, Hilton and Conrad branded hotel towers as well as a casino, retail, and serviced apartments. Construction on the parcels was halted during the global financial crisis in November 2008. LVS has also not received a land concession for Parcel 3, on which the company has capitalized $34.5 million in costs. LVS received a land concession for Parcels 5 and 6 in November 2009...SJM Holdings has been interested in taking over Parcels 7 and 8 from Las Vegas Sands. In an interview cited in a September 7 Wall Street Journal article 'SJM Covets Sands's Land,' SJM Chief Executive Ambrose So indicated SJM sent a letter to the Macau government expressing interest in the sites."

Las Vegas Sands closed Friday at $49.24, up by $0.07, or 0.14 percent. Barclays has a price target on them of $52.

No comments: