Casinos in Macau, Singapore, and Las Vegas Sands's Struggles
Challenges loom for Las Vegas Sands, according to Deutsche Bank's analysis.
Let's dive into the deluge of the casino industry's fierce battlefield.
In the opulent realm of gaming meccas, two cities—Macau and Singapore, plus Las Vegas Sands—steal the spotlight. A recent report by Deutsche Bank analyst, Carlo Santarelli, sheds light on the current state of Las Vegas Sands, a titan in the industry.
Santarelli predicts that for Las Vegas Sands to recover, four fundamental shifts need to occur. Firstly, Macau's gambling revenues must pick up speed and stabilize in Q2 2025, a significant dip being observed in early April. Secondly, a tranquil geopolitical environment is essential. Thirdly, a change in the broader economic sentiment in China is critical. Lastly, these factors would create an environment conducive for Las Vegas Sands to thrive as an inexpensive, "beat-and-raise" [1] story in 2025.
Santarelli acknowledges that the current conditions are less than ideal, with the specter of further negative revisions looming. He adjusts his price target for Las Vegas Sands to $59 per share, lower from his previous $62. At the time of his note, the stock was trading at $32.09, down 22% since the imposition of new tariffs on China, the primary market for Las Vegas Sands's business.
Santarelli also suggests that lower market growth and a "more subdued" expansion of the Macanese market might necessitate adjustments to his estimates. His cash flow forecasts for Q1 2025, the whole year, and 2026 are 13%, 8%, and 6% below Wall Street consensus, respectively.
Santarelli points out a slowdown in Macau's revenue growth, projected to be only 1% for Q1 of the year, lower than anticipated expectations. He notes a concern in the declining trend in mass-market gambling, where profit and cash-flow margins tend to be high. According to Santarelli, Sands investors initially expected the company to expand its Macanese market share in the first quarter but notes a contraction in market share instead.
Despite these challenges, Santarelli predicts Q1 revenue of $1.58 billion to $1.63 billion for Las Vegas Sands, while Wall Street anticipates $1.8 billion. He attributes Sands's ability to stay "above the fray" during periods of aggressive promotional activity as one of the reasons for this.
Turning to Las Vegas Sands's Singapore front, Santarelli indicates that Marina Bay Sands has shown a healthy growth trajectory. However, he warns of challenging comparisons in the first half of the year, compared to the robust performance of 2024.
Overall, Santarelli remains optimistic about Las Vegas Sands's prospects, reiterating a Buy rating on the stock despite the current challenges.
Insights:
- Macau's Gaming Revenue Landscape: In Q1 2025, Macau's total gross gaming revenue (GGR) was MOP57.66 billion (US$7.19 billion). The mass-market segment accounted for 74.9% of the GGR, driven by mass baccarat, while the VIP segment represented 25.1%, a decline from its 49% share in Q1 2019. [1][2][3]
- Traditional Market Leaders: Operators like Las Vegas Sands and Galaxy Entertainment, with their extensive mass-market-focused properties, often hold larger market shares in Macau. [3]
- Market Trends: Post-pandemic recovery has been strong for the mass-market segment, with Q1 2025 mass GGR being 10.9% higher than Q1 2019. In contrast, the VIP revenue remains less than half of its pre-COVID levels. [1][2][3]
[1] TheStraitsTimes (2025). [2] Macau Government Tourism Office (2025). [3] GGRAsia (2025)
- Santarelli's valuation of Las Vegas Sands indicates a lower price target of $59 per share, a drop from his previous estimate of $62, due to the ongoing struggle of the company, particularly in the light of the significant dip in Macau's gambling revenues.
- The first critical factor Santarelli identified for Las Vegas Sands's recovery is the stabilization of Macau's gambling revenues, which experienced a significant dip in Q2 2025.
- In his analysis, Santarelli forecasts that a tranquil geopolitical environment will play a substantial role in Las Vegas Sands's recovery strategy, alongside a change in the broader economic sentiment in China.
- The financial projections made by Santarelli for Las Vegas Sands in Q1 2025, the whole year, and 2026 show cash flow decreases of 13%, 8%, and 6% compared to the Wall Street consensus, respectively, with the slowdown in Macau's revenue growth being a major concern.
