LVS share price skyrockets

May 30, 2006 3:58 AM

Wall Street investors practically abandoned the shares of Las Vegas Sands Corp. (LVS) following the announcement that a new partnership planning a Macau casino was looking at an American initial public offering (IPO).

For two weeks, traders pummeled the LVS share price, pushing it down nearly 20%. Apparently, these investors failed to consider the impact a Singapore victory would have on the stock.

But last week, when Singapore announced that it had selected Las Vegas Sands to build the first of two casinos it planned to license, the LVS shares skyrocketed, moving on Friday from a low of $63.67 to a high of $72.10 before settling at $69.80, up $6.13 for the day. A total of 7.3 million shares were traded on Friday, about three times the average volume for one day.

In winning Singapore’s first gaming license, Las Vegas Sands beat out such high-profile competitors as Harrah’s Entertainment Inc. (HET) and MGM MIRAGE Inc. (MGM). Harrah’s had partnered with Keppel Land developers while MGM’s partner was the CapitalLand.

A second license will be awarded by Singapore for a development at Sentosa Island later this year. CapitalLand’s partner in this bid is Kerzner International Inc. (KZL). Harrah’s also will be among the bidders for this license, as will Isle of Capri Corp. (ISLE) and Starwood Hotels and Resorts Inc. (HOT).

Las Vegas Sands is expected to seek funds for the Singapore project with a special stock offering.

The Macau partnership of Publishing & Broadcasting Ltd. of Australia and Melco International Development Ltd. of Macau was arranged by the sons of two gaming gurus, Kerry Packer’s son, James, and Stanley Ho’s son, Lawrence.

They indicated that they might use the IPO in the U.S. for as much as 20% of their combined company to raise about $1 billion.

The Macau project involves two casinos, the Crown Macau, a high-end property to be completed early next year and a mass-market complex expected to be completed in 2008.

This is just another Macau development that has attracted the interest of investors who see that "special administrative region" of China as the soon-to-be gambling capital of the world.

In a recent seminar held in northern Nevada, it was noted that Macau is already challenging Las Vegas in reported gaming revenue. Last year’s take was listed as $5.6 billion but one analyst said that probably was understated.

Sean Monaghan, a casino analyst at Merrill Lynch, remarked, "There’s a significant underreporting of actual revenue of the market," giving a 40% tax rate as the probable reason.

"Some people think $5.6 billion is almost as big as the Las Vegas Strip and all that. It’s probably $2 billion — at least — bigger than that," Monaghan said.

Macau gaming action is being fueled by a great many newly affluent gamblers from mainland China and the region’s 40-mile distance from Hong Kong.

Another racino

Atlantic City casino operators have debated the impact the advent of slot machine emporiums in Pennsylvania will have on their operations. Pretty well ignored has been the racino at Aqueduct that is awaiting construction by MGM MIRAGE Inc. (MGM).

The failure of the New York Racing Association (NYRA) to get its act together has prevented the Aqueduct racino from getting underway.

But nothing seems to be standing in the way of a new racino at Yonkers Raceway.

For many years, Yonkers Raceway, owned by the Rooney Family of Pittsburgh fame, led the nation in presenting the world’s best harness horses and their illustrious drivers. However, the days of harness racing faded and Yonkers’ reputation went with it.

But, after settling a dispute with its horsemen regarding lost racing days caused by the construction of a $225 million video lottery casino, the New York gaming facility, now called Empire City at Yonkers Raceway, seems well on its way for an opening later this year.

Handicapping bonus

Churchill Downs Inc. (CHDN) will offer $1 million to a handicapper that is capable of winning one of the company’s qualifying tournaments and then goes on to win the 2007 Daily Racing Form/National Thoroughbred Racing Association National Handicapping Championship set for Las Vegas next January.

The company said it will hold qualifying tournaments beginning July 1 at these racetracks: Hoosier Park, Calder, Churchill Downs, Arlington Park, Ellis Park and Fair Grounds in New Orleans.

Chips deal

Gaming Partners International Corporation (GPIC) has announced that it has completed the installation of RFID chips and readers at the newly-opened Red Rock Casino Resort and Spa owned by Station Casinos Inc. (STN).

The property has set up 87 gaming tables that utilize RFID technology. The special chips improve security by verifying chips transactions.

THE INSIDER: Slot machine maker WMS Industries Inc. (WMS) has agreed to acquire the Orion Co., a gaming machine manufacturer in the Netherlands, for slightly more than $30 million.

Isle of Capri Casinos Inc. (ISLE) plans a $140 million development at its Pompano Park harness track in Florida to house 1,500 slot machines, a poker room, four restaurants and a multi-story bar.

Also Isle of Capri says it will pursue the development of a casino resort in West Harrison County, Miss.

Penn National Gaming Inc. (PENN) says that when the company reopens its Bay St. Louis, Miss., casino later this year it plans to name the property the Hollywood Casino.

MGM MIRAGE Inc. was recently named a "Top 20 Company for Asian Pacific Americans" by the Asian Enterprise magazine.

Progressive Gaming International Corp. (PGIC) has scheduled a quarterly earnings report for Tuesday, June 20, at 8 a.m. PDT.

The Rhode Island House of Representatives has approved legislation that will permit the state’s voters to decide whether a casino should be built in West Warwick. The bill must be approved by both the Senate and the governor before it becomes a November referendum. The casino is sought by the partnership of Harrah’s Entertainment Inc. and the Narragansett Indians.

Analysts at Susquehanna Financial have initiated coverage of Isle of Capri Casinos Inc. with a "positive" rating.

Monarch Casino and Resort Inc. has announced a $50 million expansion project at the Atlantis Casino Resort in Reno, Nev.