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Foolish Face-Off: Genting Singapore vs. Las Vegas Sands Corp

DuelWelcome to the Foolish Face-off! This series sees us pitting companies operating in the same industries against each other in simple contests. The aim’s to help make comparisons easier for investors, who might find such decisions harder than picking either char siew rice or nasi lemak for lunch.

We’ve already placed Singapore-listed companies in numerous bouts against each other as well as with foreign competitors. Today, we’ll see who prevails in a high-stakes gambling contest between Genting Singapore (SGX: G13) and Las Vegas Sands Corp (NYSE: LVS).

Introduction

Genting Singapore would very familiar with punters, tourists in Singapore as well as locals who want a nice stay-cation. The company operates a casino, hotels and the Universal Studios Singapore theme within its flagship Resorts World Sentosa. Last year, RWS welcomed more than 16m merry-making visitors.

Fans of marine life would be happy to know that RWS houses the world’s largest Oceanarium that’s home to more than 100,000 marine animals from 800 different species. Visitors looking for a delicate spa-pampering would also be greeted with Singapore’s largest luxury spa from the ESPA brand in the Resort. These are just some of the many attractions available in RWS.

But, despite the multitude of leisure activities and facilities available in the Resort, the main cash-cow for the company’s still the gaming business – the casino contributed 80% of the S$2.95b that Genting Singapore pulled in as revenue for 2012.

Residents in Singapore might remember a period of time a few years ago when Marina Bay Sands and RWS were set to transform Singapore’s tourism scene. After introducing the company responsible for RWS, it only seems fitting that the other company in this Foolish Face-off would be the parent of MBS – Las Vegas Sands.

As a company, Las Vegas Sands is a lot more global than Genting Singapore. The former owns premium casinos and integrated resorts in the world-famous Las Vegas strip in the USA such as The Venetian and The Palazzo Las Vegas. The company also has a hand in another global gaming hot-spot in Macau with properties such as The Venetian Macao, Sands Macao and Four Seasons Hotel Macao among others.

Within Singapore, Las Vegas Sands’ MBS is home to the Sands Skypark and one of Singapore’s two casinos, among other attractions.

As it is with gaming companies, revenue from casinos would dominate all other activities and Las Vegas Sands’ various casinos contributed almost 80% of the company’s annual sales last year that came up to US$11.13b.

Genting Singapore Las Vegas Sands
Market Cap S$17.8b US$48.3b
Last 12 month Sales S$2.83b US$11.7b

Round 1: Valuation

In investing, it is important to know what companies are being priced cheaper in the market and that’s why we’ll be comparing the valuations of the shares based on their Price-to-Earnings (PE), Price-to-Sales (PS) ratio and Dividend Yield in the first round of the Face-off.

Genting Singapore Las Vegas Sands
PE 29.2 30.2
PS 6.3 4.1
Dividend Yield 0.7% 1.7%
Share Price S$1.46 US$58.67
*PE, PS are based on figures from the companies’ last twelve months. The dividend yield is based on reported figures for the last completed financial year.

Genting Singapore just about edges out Las Vegas Sands in the PE-contest with a lower PE, but loses out in the round with its higher PS ratio and lower Dividend Yield.

Winner: Las Vegas Sands

Round 2: Profitability

It’s easy to boost sales – after all, the best way to sell a dollar, is to sell it for 50 cents – but, it is how much profit a company can earn that matters to investors in the end. That is why we’ll be looking at the profitability of Genting Singapore and Las Vegas Sands in the Foolish Face-off’s second round through three metrics: Gross Margins, Net Margins and Return on Equity (ROE).

The profit margin tells us how efficient a company is at turning each dollar of sale into profit. Meanwhile, the ROE of a company signals its effectiveness at generating a profit from each dollar of shareholders’ capital. In general, the higher the ROE, the better.

Genting Singapore Las Vegas Sands
Gross Margins 38.0% 75.2%
Net Margins 21.6% 13.7%
Return on Equity 6.7% 21.7%
*The financial figures used are based on the companies’ financial performance over the last 12 months.

We can see that Las Vegas Sands beats out its Singaporean competitor with a better handle on Gross Margins and ROE. And for that, Las Vegas Sands takes Round 2!

Winner: Las Vegas Sands

Round 3: Growth

The final round of the Foolish Face-off sees us comparing the two companies’ growth. As investors, we are concerned about growth because companies that can increase their sales and profits over time will see their intrinsic value grow as well. Dividend growth’s also important for shareholders as it can provide a growing source of income.

Because of the reasons above, Round 3 sees us comparing revenue, earnings per share (EPS) and dividend growth rates for Genting Singapore and Las Vegas Sands.

Genting Singapore Las Vegas Sands
Revenue Growth CAGR 46.3% 21.1%
EPS Growth CAGR 49.1% 44.4%
Dividend Growth CAGR 0.0% -2.6%
*Compounded Annual Growth Rates (CAGR) for Revenue and EPS for both companies are calculated for Financial Years 2008 to 2012.
**CAGR for Dividends begin from FY 2011, as both companies only started to pay a dividend in that year

With the outcome of the Face-off already fixed due to Las Vegas Sands’ victories in the previous two rounds, Genting Singapore made up some lost ground with better overall growth as compared to its American counterpart.

Winner: Genting Singapre.

Foolish Bottom Line

Final Score: 2-1 to Las Vegas Sands!

Las Vegas Sands edges out Genting Singapore in the latest instalment of the Foolish Face-off series with its cheaper shares and stronger profitability

Bear in mind however, that this is not a definitive conclusion as there are many other important elements of a business that we failed to cover, such as its competitive position and capital structure to name but a few.

If you’re interested to learn more about other businesses and how they’ll fare against competition, do stick around as we aim to bring you more Foolish Face-offs in the future!

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.