Genting SP / Las Vegas Sands

Genting SP / Las Vegas Sands: LVS last night reported earnings that fell 34% and missed estimates. In particular, MBS delivered US$330.4m in adjusted EBITDA, -18.5% yoy. EBITDA margins fell to 47.6% from 55.0% yoy. This came on the back of lower rolling volume, low hold on rolling table games play and higher provisions for accounts receivable. Investors will likely be concerned if GENS would experience the same trend this quarter. GENS reports 2Q12 results after market on 10 Aug. Also, Nomura reiterates its Reduce call, with TP $1.42. Says there is too much unknown in the upcoming 2Q earnings. Cautions on the sizable amount of bad debts to be written off on top of the weaker VIP and mass market segments. Adds, regulatory risks will likely persist till 2015 elections, as the govt is mindful of the ill effects of casino gambling on the public (voters). Believes over the longer-term, a complete overhaul of the low gaming tax structure could not be discounted. Hypothesises the potential abolishment of the $2000 annual pass to discourage addiction/ frequent visitors. Its sensitivity analysis suggests that a 50% decline in the mass market business (non-rolling chip and slots) could slash 2013’s earnings by 53% and its TP by 40% to $0.85/sh. GENS continues to slide to new 52 wk lows, at $1.27, -1.2%.