Las Vegas Sands Sells Vegas Properties

We have a generally constructive stance on Las Vegas Sands' LVS sale of its Las Vegas assets (9% of 2019 EBITDA) for $6.25 billion, as it represents a solid 13 times our 2023 EBITDA forecast and stands to add around $1-$2 per share to our $58 fair value estimate, leaving shares overvalued. Also, we think the cash received from this deal is likely to be invested further into Las Vegas Sands' leading Asian gaming position, helping entrench its regulatory intangible advantage (source of its narrow moat). As a result, we plan to model in a renovation at its Venetian Macau properties in 2024-25, leading to revenue acceleration at the property in 2026-27. Mitigating our favorable view is our thought that this sale removes an opportunity for the company to compete in the expanding U.S. sports betting market, which we see reaching $6.2 billion in sales in 2024. And although Las Vegas Sands can still develop a mobile presence or partner with an existing operator, the aggressive investments made in the space by no-moat peers MGM and Caesars have positioned them to lead in U.S. sports betting. Another potentially minor negative emanating from this deal is that Las Vegas Sands will lose cross-play between gamers playing on both sides of the world, although we think this represents a small piece of the company's business, given its focus on the mass and premium mass gamer versus VIP player. While no closing date was given, we expect the deal to go through, as the acquirers (Apollo and VICI) don't have anticompetitive presences in Las Vegas and financing is already in place.

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