Morgan Stanley on LVS


Las Vegas Sands Corp.

Quick Comment: FS Condo Sales Could Be Worth $1/sh.

Impact on our views: We see the potential sale of condos at the Four Seasons as a minor positive, adding incremental $1/share in equity value. While additional government approvals are necessary, this announcement could have a positive read-through on LVS / Macau government relations. We include the sales in our Bull Case valuation.

What’s new: LVS announced it has received notification from the Macau Land, Public Works and Transport Bureau that should clear the way for LVS to begin preparing for the sale of shares in a co-op fashion in its Four Seasons branded apartments in Macau.

We estimate there are ~1.1 million square feet of condos at the Four Seasons. Assuming a selling price of ~$750 per SF, we estimate $825M in gross proceeds. We also assume there are sufficient non-operating losses on non-gaming operations that can be used to offset potential gains (condos were built at a cost of ~$450M). Given the historical delays in this process and the somewhat complicated co-op structure, it is too early to predict with certainty when sales will commence and how long the sales period will last.

Investment thesis: We continue to rate LVS O/W based on our expectations of (1) a continued ramp in Singapore, (2) strong mass-market positioning in Macau, and (3) strengthening FCF profile that increases LVS’s ability to win new growth projects.


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