Published on: December 9, 2024, 01:01h.
Last updated on: December 9, 2024, 01:01h.
Las Vegas Sands (NYSE: LVS) saw an upward trend in midday trading on Monday due to speculation about China implementing more aggressive economic stimulus measures next year. This has led a research firm to believe that it could positively impact the gaming stock.
Hedgeye has identified the casino as a new long idea, suggesting potential upside of 20% to 30% for investors. Analyst Sean Jenkins mentioned that Chinese stimulus efforts could drive growth for Macau casino operators, including Las Vegas Sands, the parent company of Sands China.
“While news of potential stimulus measures in Mainland China may benefit the Macau sector, there are other reasons to be optimistic about Macau and LVS in particular,” Jenkins stated.
With five casino hotels, Sands China is the largest operator in Macau by number of venues. The company also holds a significant market share among mass and premium mass players.
Opportunity for Growth with China Stimulus
In recent months, Macau casino stocks saw a rally after the People’s Bank of China (PBOC) reduced interest rates and Chinese authorities announced new stimulus measures targeting specific consumer segments.
This has raised hopes for broader stimulus measures to support domestic consumption and benefit Macau’s gaming-dependent economy. However, these measures have not yet materialized, leading to some disappointment among investors in Macau gaming stocks.
With the return of President-elect Trump to the White House, China seems inclined to boost its economy. The Politburo has mentioned plans for looser monetary policy and more proactive fiscal measures in the coming year. President Xi Jinping emphasized the need to build confidence in the economy and create a favorable external environment for China.
Hedgeye also believes that market estimates for Macau gross gaming revenue are unduly bearish and overlook the potential benefits from Sands’ Londoner integrated resort.
Recognition for Sands Capital Return Program
Jenkins pointed out that the growth in Singapore, where LVS operates Marina Bay Sands, a highly profitable resort, is being overlooked by investors. Banks are currently seeking a substantial loan for the property’s expansion.
Additionally, market participants are not acknowledging Sands’ efforts to return capital to shareholders adequately.
In October, the Las Vegas-based company raised its quarterly payout from 20 cents to 25 cents per share, marking its first increase since reinstating the dividend in August 2023. Sands also announced a share repurchase of up to $2 billion, signaling confidence in the stock.