In April 2010, Las Vegas Sands ( LVS ) opened the Marina Bay Sands facility in Singapore at an approximate cost of $5.5 billion. The integrated resort has 2,600 rooms, 161,000 square feet of gaming space, and 1.3 million square feet of convention and meeting space. LVS is a developer, owner and operator of destination casino resorts and operates in the U.S., Macau, and Singapore and competes with Wynn Resorts ( WYNN ), MGM Resorts International ( MGM ), SJM (HKG:0880), Galaxy (HKG:0027) and Harrah's among others.
Our price estimate for LVS stands at $49.36 , which is almost 20% ahead of the current market price.
Gambling in Singapore
In 2006, the Singaporean government opened to the gaming industry by awarding two casino licenses, which LVS and Genting Singapore received. The government has decided not to issue another gambling license for at least ten years, creating an effective duopoly. Genting Singapore's Resorts World Sentosa facility was the first resort to open in February 2010.
According to estimates by Royal Bank of Scotland, Singapore gaming revenue will rise by 25% to reach $6.4 billion this year indicating that Singapore is on track to overtake the Las Vegas Strip, which RBS estimates will earn around $6.2 billion in 2011. This would make Singapore the world's 2nd biggest gaming center behind Macau.
Marina Bay Sands attracted more than 11 million visitors whereas its rival Genting Singapore attracted more than 15 million visitors in 2010. We expect these traffic figures to remain strong despite the Singaporean government's $100 ($79) entrance fee for casinos that was designed to act as a deterrent.
An increase in the number of high net worth individuals (HNIs) in Asia is one of the key drivers behind this growth, and this will drive Singapore's VIP table game wages, which alone accounts for 10% of the company's value by our estimates. We believe that LVS is in a prime position to gain as the gaming industry in Singapore grows benefiting from its competitive advantage as one of the only gaming options in this emerging gaming hub.
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