Why Las Vegas Sands will burn huge cash in 2015


Dec. 4 2020, Updated 10:53 a.m. ET

Capital expenditures

Capital expenditures for casinos are associated mainly with enhancements to existing integrated resorts and for the development of their ongoing projects. Las Vegas Sands’ (LVS) capital expenditures during the fourth quarter totaled $385.5 million. This includes construction, development, and maintenance activities of $317.5 million in Macao, $37.3 million in Las Vegas, $25.5 million at Marina Bay Sands in Singapore, and $5.2 million at Sands Bethlehem in Pennsylvania.

The above chart shows that LVS incurred $1,179 million capital expenditures for the year ended December 31, 2014, compared to $898 million in 2013. This increase was attributable primarily to the development of The Parisian Macao and the St. Regis at Sands Cotai Central.

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Las Vegas Sands (LVS) will burn huge cash in 2015 to fund the development of The Parisian Macao in 2015 and 2016, as represented by the blue bars in the above chart. A good amount of capital expenditures will also be incurred in 2015 for the St. Regis property, as shown by the orange bars in the above chart.

Casino companies such as Wynn Resorts (WYNN), Melco Crown Entertainment (MPEL), and MGM Resorts International (MGM) will also burn out significant cash for the development of their ongoing resorts in the Cotai region.

A good way to get exposure to these companies is through ETFs such as the VanEck Vectors Gaming ETF (BJK), which has ~25% investment in these companies.


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