Las Vegas Sands Corp. (LVS), Wynn Resorts, Limited (WYNN): Why Is the Cotai Strip so Important?

As the Chinese government intends to diversify Macau from gambling, the Macau government will only allow a 3 percent annual growth of the table game numbers over the next 10 years. With all the upcoming casinos, government’s target number seems to be inadequate. Furthermore, as the transportation continues to improve, mass market will become the main growth driver going forward.

What now?

While Macau remains the primary growth driver for top U.S. casinos, including Las Vegas Sands, Wynn Resorts, Limited (NASDAQ:WYNN), and MGM, these casinos will put all their efforts into Cotai Strip to continue the expansion. Las Vegas Sands had returned $4 billion of cash to its shareholders through the last 5 quarters as it cash flow continued to improve. Las Vegas Sands also plans to divest its Sands Bethlehem to continue its focus in Asia and return more capital to shareholders. With over 14 million visits to Las Vegas Sands’ Cotai Strip properties, Las Vegas Sands continues to enjoy a solid edge in the Cotai Strip. More solid growth, especially from the mass market, is expected for the next 3 years. However, as the government continues to aim for diversification, competition will grow as all the major casinos join the party in Cotai.

Bottom line

With solid cash flow and record revenue, Las Vegas Sands is expected to return more cash to its investors while maintaining sufficient cash and a healthy balance sheet to carry on the on-going projects. Cotai Strip will continue to be the hot growth driver for the next few years for all the casinos involved and Las Vegas Sands will continue to be the major beneficiary with its central, prime locations. The story of Cotai Strip had just begun.

Nick Chiu has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

The article Why Is the Cotai Strip so Important? originally appeared on Fool.com and is written by Nick Chiu.

Nick is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.