Try these numbers on for size.
At Las Vegas Sands Corp., the company just reported that fourth quarter revenues were up nearly 57% year-over-year. Consolidated EBITDA was up 141.3%. You got to figure that a company with “Las Vegas” in its name knows how to make some money.
But that’s not where it is making its money. It’s in two tiny Islands – one about an hour south of Hong Kong in Macao and the other in a recently opened (last April) giant of a casino in Singapore.
On the long drive back from Quebec on Tuesday (after a little cross-country skiing trip northwest of Montreal), we were listening to the radio (in French) to get a sense what’s on the minds of the Quebecois. Two main topics of discussion, over and over again. The first was on the Olympics and a general complaint that the games were being broadcast in Quebec in English and not in French. The radio folk weren’t implying the games should be broadcast just in French. But that there should be some French spoken. It’s an interesting point, and a unique one – there aren’t too many countries where two languages are the official languages of different regions. That’s borne out by visiting some small Quebec towns and villages where no English is spoken. Period. I tend to agree with the Quebecois – French should have been spoken since the French population is a significant one in Canada.
The second topic was on business and more specifically, asking if there was a housing bubble in Montreal and Toronto.
How the mighty have fallen. Once upon a time, the Trump name was synonymous with getting rich through deal making, with vast real estate holdings and with entertainment (from his books like “How To Get Rich” to his restaurants and golf courses). It seemed if you put the Trump name on it, it was destined for success.
Apparently not any more. Beal Bank and Carl Icahn are battling Trump for control of the Atlantic City casinos that bear his name and apparently don’t feel they need the Trump name on the side of the buildings to make the businesses successful. The casinos have been in bankruptcy since February.
Macau’s decision to curb aspects of its casino industry, as reported by WSJ colleague Jonathan Cheng, underscores why betting on casino stocks with significant Asian exposure carries particular risks associated with regional politics. As aggressive as the likes of Macau and Singapore are in building up lucrative casino industries, both locales are run by highly restrictive governments whose interests will always take priority over those who own shares in such firms as Wynn and Las Vegas Sands. Beijing’s top concern is maintaining social cohesion as best it can despite a still-very–wide chasm between the haves and have-nots. Singapore’s leaders – while less authoritarian than China’s – nonetheless know their future stems from maintaining the city-state as a pristine safe-haven; introducing casino culture as Singapore is in the process of doing – with great investment and fanfare – is risky, to say the least. Asians will unquestionably keep coming to Macau and will gravitate to the new Singapore venues even as the governments tweak rules, regulations and general access in coming years if not months. Both locales are most assuredly banking on a flood of casino-related travel and tourism revenues. But political stability will inevitably trump all other interests and the China and Singapore bosses will do what’s required to make sure the status quo isn’t threatened by the sort of frayed social fabric which widespread gambling tends to create. investors buying up stocks on the assumption these resorts will be unbridled eastern Las Vegases should think twice.
Standard & Poor’s Rating Service may have recently shifted to a negative outlook on the United Kingdom’s Triple-A sovereign rating, but Moody’s Investors Service let us know today it’s quite comfortable with the top rating for the United States.
As this blog has noted, the S&P UK move served up the inevitable chatter about whether the U.S. would be next. There were good reasons to say no, despite the huge debt being taken on by the U.S. to revive the economy and to stabilize the financial system.
America’s Triple-A seems quite secure, though there’s no doubt the nation is weaker financially than it was a couple of years ago.
Stalled Construction Project In Macau
After a recent business trip to Singapore and Hong Kong, Neal and I took a side trip to Macau to take in what Portuguese culture and history is left on this tiny but bustling island. What we noticed is that Macau isn’t quite as bustling as one would have expected. Portugal handed over Macau to China in 1999 with the stipulation that it be allowed to run autonomously until 2049 – China runs some services and Macau others. The biggest industry in Macau is tourism and the attraction today is primarily gambling. Until 2002, what gambling halls existed on the island were run by a Hong Kong businessman. But the government allowed for more casino operators and sprinting through the just-opened door were a host of big companies from Las Vegas – MGM Grand (in partnership with the daughter of the Hong Kong businessman mentioned above, Wynn and Las Vegas Sands. By the end of 2006, Macau became the highest volume gambling center in the world, with Sands Macau the largest casino as measured by gambling tables.
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