Las Vegas Sands Corp

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					                   UNIVERSITY OF OREGON                                                                              !"#$"%&#&'
                               INVESTMENT GROUP!                                                            ()*+,-./'0))1+'

Las Vegas Sands Corp.
     Stock Data'
!           Price (52 weeks)   $6.32­$26.57
          Symbol/Exchange      LVS / NYSE
             Beta (Hamada)     1.61
!            Beta (Terminal)   1.29
         Shares Outstanding    656,836,950
!      Average daily volume    35,386,100
          (3 month average)
!        Current market cap    13.92B

!             Current Price    $23.61
                  Dividend     N/A
!            Dividend Yield    N/A
     Valuation (per share)'
             DCF Analysis      $16.51
      Comparables Analysis     $25.05
               Target Price    $20.78
              Current Price    $23.61

     Summary Financials '
                                2009A (In thousands)'
                   Revenue           $4,563,105                     !
                Net Income           ­$540,050
       Operating Cash Flow            $364,506                      !

 !                                                                  !


                                             Covering Analyst: Sean Golin

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Member students are not certified or licensed to give investment advice or analyze securities, nor do they purport to be.
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=>+'?.@>+'A>*1+'()/BC'                                                         ' ' university of oregon investment group



Las Vegas Sands Corp. (LVS) owns and operates casinos and hotels located in strategically placed areas in the US and
Asia. The company was founded in 1988 and is headquartered in Las Vegas, NV. The company operates the
following properties at the following locations:

The Venetian
The Venetian is the flagship property of LVS. It was opened in 1999 after the demolition of the Sands casino. The
Venetian is located on the Las Vegas Strip. It consists of over 8,000 hotel rooms and is equipped with a 120,000 sq.
ft. gaming floor.

The Palazzo
The Palazzo is also located on the Las Vegas Strip next to The Venetian. It was opened in late 2007 and is one of the
largest LEED Gold Certified buildings in the nation.

Sands Expo Convention Center
The Sands Expo is the second largest convention center in Las Vegas. In addition to serving as convention center for
the Venetian, it also is used for overflow traffic of the Las Vegas Convention Center.

Sands Bethlehem
Opened in Bethlehem, PA in 2009. The Sands Bethlehem originally consisted of slot machine and electronic table
games, but LVS obtained a gaming license, which will allow them to expand their offerings to include poker,
blackjack, and craps.

Venetian Macao
The Venetian Macao is located in the Macau, which is in the People’s Republic of China. It is one of the largest
casinos in the world, in terms of gaming space at 550,000 sq. ft. Just like its counterparts, it offers hotel rooms,
gaming, dining, shopping, and entertainment.

Sands Macao
The Sands Macao was opened in 2004 and signifies Las Vegas Sands’ entry into the Chinese market. It consists of
229,000 sq. ft. of gaming space.

Four Seasons Hotel
Located on the Cotai Strip in the People’s Republic of China. The Cotai Strip is positioned to be the China version of
the Las Vegas Strip. The Four Seasons Hotel location, allows LVS access to this market and plans for additional
locations are set as this area expands.

Marina Bay Sands
The newest of all LVS properties, Marina Bay Sands was opened in Singapore in 2010. It is one the costliest casinos
in the world, at an anticipated total cost of $5.7 billion. However, it is projected to generated $1 billion in revenue

In total, the company consists of 27,000 full-time employees for the operations of the above 8 properties but has
planned to expand further, which will be discussed later within this report.

=>+'?.@>+'A>*1+'()/BC'                                                         ' ' university of oregon investment group

Major Revenue Segments
The revenues for Las Vegas Sands Corp. can be broken down into four major areas. These areas include casino
revenues, hotel revenues, food and beverage revenues, and convention/retail revenues. I will break these down
individually to provide details.

Casino Revenues
Casino revenues represent about 71.5% of total revenues and is the major revenue driver for LVS’s business.
Included in this segment is revenue generated from slot machines and table games. The most surprising aspect of
casino revenue is the amount generated from VIP clients and high-rollers. In Q1 2010, Marina Bay Sands generated
approximately 48% of its revenues from these clients. However, this number may be skewed as it has only been open
for a short period of time. LVS enjoys a gross margin from casino revenues of 33.3%.

Hotel room bookings represent 13.3% of Las Vegas Sands’ total revenues. LVS had made strong commitments to be
a luxury leader in accommodations and has a priority to the higher net worth, business class. Their room rates are set
to reflect this and will not drop below a certain level, as they do not want to lose any prestige that is synonymous with
their brand. Gross margins for hotel revenues in 2009 were 81.6%.

Food and Beverage
While only 6.7% of LVS revenues are generated in this segment, it represents an important aspect of their business.
As previously mentioned, the demographic Las Vegas Sands caters to is wealthier individuals. This is indicative of the
food and beverages offered at their locations. LVS has hired numerous world-famous chefs to open restaurants
located within their establishments. These chefs include Mario Batali, Emeril Lagasse, Wolfgang Puck, etc. The
quality of food offerings goes hand-in-hand with quality of accommodations. Gross margin on their food and
beverage products was 49.35% in 2009.

Convention and Retail
Although only 8.5% of their revenues are generated from this segment, it is very important to their business model.
Conventions represent a large portion of the revenues generated in other segments. For example, when a convention
is occurring at the Sands Expo in Las Vegas, patrons are able to obtain group room rates at The Venetian. While little
revenue is actually being generated from the convention itself, they are increasing revenues from the hotel rooms,
which will lead to increased revenues in the casino, which also leads to increases in food and beverage revenues.

As you can see, the most important aspect is casino revenue. Without it, LVS would not be able to operate.
However, the other revenue segments are crucial in order to get customers into the doors, which enables them to
generate the revenues necessary.


After the opening of the Sands Macao, CEO Sheldon Adelson stated that Las Vegas Sands Corp. would become a
more Chinese enterprise. This was soon the case as LVS continued to open 3 additional properties in China and
Singapore. It’s not to say that LVS won’t look to expand domestically, as they opened 2 domestic locations since this
statement as well.

At the end of 2009, 71.8% of revenue generated, came from their Macao locations in China, while 28.2% of revenues
is still being generated domestically in the US. This trend has been shifting over time, as shown by 2007 revenues in
which 33.4% of revenues came from US properties, compared to 66.6% in Macao.

=>+'?.@>+'A>*1+'()/BC'                                                      ' ' university of oregon investment group

Domestically, LVS is planning to further expand the offerings at their current locations, in addition to building a
residential condominium tower called the St. Regis, which will be located in between The Venetian and The Palazzo in
Las Vegas.

Internationally, Las Vegas Sands is currently underway in expanding their Macao locations on the Cotai Strip. Three
new resorts are planned pending government approval of contracts. In addition, in a most recent Q1 2010
conference, the CEO mentioned that they will be looking in other Asia countries for opportunities. He most
specifically mentioned South Korea and Japan. He has also mentioned the possibility of a Vegas-style strip in Europe.


CEO- Sheldon Adelson
Sheldon Adelson has been with Las Vegas Sands Corp. from the very beginning, when he and his partners bought the
Sands hotel in Las Vegas in 1988. He has grown and transformed the business by rebuilding the Sands into the
Venetian, and undertaking many various expansions. He is 76 years old.

COO- Michael Leven
Michael Leven has extensive experience in the hotel industry. He served as a director for LVS in May 2005, before
leaving in July 2005. He has since rejoined LVS in March 2009. He is 72 years old.

The good thing about Sheldon Adelson, the CEO, is that he has a significant personal interest in the success of the
company. In addition, a very large percentage of his personal wealth is tied to LVS. However, as you can witness he
is getting old. I have not found any mention that is planning to step down or an announcement of a successor.


       May 7, 2010 – Casino Stocks May Benefit from Jobs Data - As jobs domestically are increasing, Las Vegas
        casinos have seen an increase in consumers. This is fairly obvious as gaming revenues will increase as people
        have more disposable income.

       May 6, 2010 – Las Vegas Sands Corp. Reports First Quarter 2010 Results – With strong revenue growth, LVS
        beat analyst estimates by obtaining an adjusted EPS of $0.07 compared to estimates of $0.03.

       April 29, 2010 – Casino Stocks: Which Has the Winning Hand? – LVS and WYNN are expected to perform
        better than other casino stocks, given their position to take advantage of the Macau market.

       April 27, 2010 – Marina Bay Sands Opens Its Doors – The unofficial opening of Marina Bay Sands takes
        place. The grand opening event is set for June 23, 2010. Although there were marketing issues with Marina
        Bay Sands, word of mouth spread and the casino has the potential to hit its breakeven point within 5 years.


The hotel casino industry during the 2008 recession looked very bleak. As consumers no longer had the income to
travel and gamble, revenues across the board took a huge dive. However, as the economic situation begins to
improve, the market becomes even more attractive. Considering that 66% of the industry’s revenue is generated from
gambling, it is essential that the economy is in a good situation as consumers need to have disposable income to

=>+'?.@>+'A>*1+'()/BC'                                                          ' ' university of oregon investment group

In the US, 70% of gambling revenue is from domestic gamblers. With the US economy in trouble, so is the hotel
casino industry’s ability to generate revenue. 30% of revenue is from foreign high rollers. However, with the traffic
decreasing, primarily in Las Vegas, the ability to pull foreign high rollers declined as well. With the emergence of the
Macau area and other European casinos, there is danger that the high rollers may start to prefer other alternatives. As
a result, it is important to be positioned in areas that attract these high net worth individuals.

The competition across the hotel casino industry is very high across all geographical regions. As previously
mentioned, these casinos are in constant rivalry to draw customers to not only stay at their hotels, but just to enter the
doors, as each person can generate important revenue. This is why many hotels go above and beyond in terms of
service and extravagance. The quality of offerings in terms of shopping, dining, accommodations, attractions, and
gaming space are all important aspects of the hotel casino industry. Offering each of these in way that differentiates
themselves can create a competitive advantage.

 Due to the cost and scale of construction, the barriers to entry are very high. Not only the cost, but location plays a
huge factor. Unfortunately, the availability of prime location is nearly impossible to find as the majority of all the best
spots have casinos already.

Regulation is becoming a bigger issue than in previous times. As the industry begins to open up in Asia and on a
global scale, there is threat from regulation in terms of taxation, construction, and the way these hotels operate. The
market in Macau has been growing very rapidly. As we know, the Chinese government can be very strict in the way
they operate.

The existing hotels in Las Vegas and Macau are in prime position for growth. As the US economy begins to turn
around, high growth is expected. In Las Vegas, revenues across the industry are expected to grow by 30-40% in 2010
alone. Signals are indicating that room and gambling revenues are up in dramatic fashion as first quarter reports come
in. As I’m sure you have heard recently, China is one of the fastest growing economies in the world. This is evident
in this industry as the expansion of Macau and Cotai Strip become larger. Companies with a strong presence in these
regions can attract a vast range of consumers and most importantly, draw in the high rollers and VIP that generate
critical revenue. As a result, being positioned globally can strengthen profitability, especially if the economy in one
region begins to falter.



       Five-diamond luxury hotels and casinos attract the higher net worth individuals.

       Strategically placed casinos in order to take advantage of growing markets.

       Generates large amounts of cash, which enables flexibility.

       Strong relationships developed with foreign governments.

       Macao presence allows LVS to compensate somewhat for struggling Vegas.


       Very susceptible to economic downturn.

=>+'?.@>+'A>*1+'()/BC'                                                      ' ' university of oregon investment group

         Luxury structure locks out price sensitive consumers.

         Extremely high costs to undertake new developments.


         Economic boom would create a huge revenue jump.

         Expand into new international markets.

         Addition of gaming tables in casinos.

         Better positioned to attract high rollers.


         Government regulation on advertising.

         Possibility of government rejecting contracts.

         Recession worries and negative economic data can severely impact revenues.



As this industry is very tied to the success of the overall economy, the stock price moves up as more positive
economic data is released. In addition, strong growing revenues in foreign markets can push the price up as it can
counteract the negatives that LVS faces domestically.


For the most part, downside pressure on the stock price is applied if the exact opposite occurs that was mentioned in
the upside catalyst. Negative economic data will crush the price of the stock, as fears of the company to generate
revenue increase. In fact, during the 2008 downturn, LVS, mentioned the possibility of default of some outstanding
bonds, which dropped the price as low as $1.42 as fears of bankruptcy ensued.!


For my comparables analysis I wanted to compare companies that were tied to similar risks as Las Vegas Sands.
These risks primarily include the strong tie that LVS has to economic data and its ability to generate revenue. In
addition, I chose companies that offer similar geographic locations. The manner in which these companies generate
revenues was also an extremely important factor in my selection. I tried to line up the major revenue segments
discussed earlier and find companies that operated in the same manner. The following companies were chosen:

=>+'?.@>+'A>*1+'()/BC'                                                        ' ' university of oregon investment group

Wynn Resorts Ltd. (WYNN) – 40%

“Wynn Resorts, Limited, together with its subsidiaries, engages in the development, ownership, and operation of
destination casino resorts. The company owns and operates Wynn Las Vegas casino resort in Las Vegas, which
includes 22 food and beverage outlets comprising 6 dining restaurants, 2 nightclubs, 1 spa and salon, 1 Ferrari and
Maserati automobile dealership, wedding chapels, an 18-hole golf course, meeting space, and foot retail promenade
featuring boutiques. As of December 31, 2009, Wynn Las Vegas casino resort featured 135 table games, 1 baccarat
salon, private VIP gaming rooms, 1 poker room, 1,920 slot machines, and 1 race and sports book. It also owns and
operates an Encore at Wynn Las Vegas resort, a destination casino resort located adjacent to Wynn Las Vegas; and
Wynn Macau casino resort located in the Macau Special Administrative Region of the People’s Republic of China.
Wynn Macau casino resort featured 390 table games, 1,200 slot machines, 6 restaurants, 1 spa and salon, lounges,
meeting facilities, and retail space featuring boutiques. Encore at Wynn Las Vegas operated 90 table games, 1 baccarat
salon, private VIP gaming rooms, 790 slot machines, and 1 sports book. The company was founded in 2002 and is
based in Las Vegas, Nevada.” –Taken from Yahoo! Finance

Wynn was selected on the basis that it is a pure-play competitor to Las Vegas Sands. Not only does it target the same
customer base, but that are geographically identical. The Wynn and Encore are located on the Las Vegas Strip directly
next to The Venetian and The Palazzo. In addition, to the Las Vegas locations, Wynn also operates the Wynn Macau,
allowing it to take advantage of the growing market as well. Since WYNN is extremely similar to LVS, it has been
given a 40% weight.

Melco Crown Entertainment (MPEL) – 30%

“Melco Crown Entertainment Limited, through its subsidiaries, engages in the development, ownership, and
operation of casino gaming and entertainment resort facilities primarily in the Macau special administrative region of
the People’s Republic of China. It owns and operates Altira Macau, a casino and hotel resort, that features
approximately 210 gaming tables; and deluxe hotel rooms comprising suites and villas, restaurants and dining facilities,
non-gaming entertainment venues, recreation and leisure facilities, and meeting facilities; Mocha Clubs, which provide
single player machines with various games consisting of progressive jackpots; and multi-player games where players on
linked machines play against each other in electronic roulette, baccarat, and sicbo. As of December 31, 2009, the
company operated 8 Mocha Clubs with a total of approximately 1,500 gaming machines. In addition, Melco Crown
Entertainment operates City of Dreams, an integrated urban entertainment resort, with approximately 500 gaming
tables, 1,300 gaming machines, 20 restaurants and bars, a performance theatre, food and beverage outlets, and guest

=>+'?.@>+'A>*1+'()/BC'                                                            ' ' university of oregon investment group

rooms; and Taipa Square Casino that features approximately 31 gaming tables. The company was formerly known as
Melco PBL Entertainment (Macau) Limited and changed its name to Melco Crown Entertainment Limited in May
2008. Melco Crown Entertainment Limited was incorporated in 2004 and is based in Central, Hong Kong.” –Taken
from Yahoo! Finance

As Las Vegas Sands expands more and more into the Macau and Cotai Strip region, it begins to face the risks
associated with that area. Melco Crown Entertainment operates specifically in Macau. In fact, it is the leading
competitor to LVS in that area. The biggest competition stemming from Melco’s City of Dreams resort. With LVS
expanding in this market and growing revenues it will operate much like MPEL. For this reason, Melco Crown
Entertainment has been given a 30% weighting.

MGM Mirage (MGM) – 25%


“MGM MIRAGE, through its subsidiaries, owns and operates casino resorts in the United States. The company’s
resorts offer gaming, hotel, dining, entertainment, retail, and other resort amenities. It also owns and operates golf
courses and a golf club. As of December 31, 2009, the company’s properties consisted of 15 wholly-owned casino
resorts and 50% investments in 5 other casino resorts. In addition, MGM MIRAGE has an agreement with the
Mashantucket Pequot Tribal Nation, which owns and operates a casino resort under the MGM Grand brand name in
Mashantucket, Connecticut. The company was founded in 1986 and is based in Las Vegas, Nevada.” –Taken from
Yahoo! Finance

MGM MIRAGE was selected has a comparable for several reasons. First, the manner in which revenues are
generated closely that of LVS. In addition, MGM operates almost solely within the Las Vegas area. This provides a
good indication of the Vegas market and travel rates, as MGM targets a slightly more mass audience with lower room
rates and lower gaming limits. In addition, MGM Mirage has opened a casino in Macau, strengthening this selection
as a comparable company. With fairly similar risks and positioning, I felt that MGM would serve as an appropriate
comparable. It has been assigned a 25% weighting.

Boyd Gaming Corporation (BYD) – 5%

“Boyd Gaming Corporation, together with its subsidiaries, operates as a multi-jurisdictional gaming company in the
United States. As of December 31, 2009, the company owned and operated 15 casino entertainment facilities located
in Nevada, Mississippi, Illinois, Louisiana, Indiana, and New Jersey. It owned approximately 812,500 square feet of
casino space, containing approximately 21,400 slot machines, 425 table games, and 7,550 hotel rooms. The company

=>+'?.@>+'A>*1+'()/BC'                                                          ' ' university of oregon investment group

also owns and operates a pari-mutuel jai-alai facility located in Dania Beach, Florida, as well as engages in travel
agency business. In addition, Boyd Gaming Corporation holds a 50% interest in a limited liability company that
operates Borgata Hotel Casino and Spa in Atlantic City, New Jersey. The company was founded in 1988 and is
headquartered in Las Vegas, Nevada.” –Taken from Yahoo! Finance

While it only was given a 5% weighting, Boyd was chosen for a couple reasons. It operates casinos and many other
parts of the US, including Las Vegas and the Atlantic City area. This was important because LVS operates in Las
Vegas as well as its Sands Bethlehem casino in Pennsylvania. Given that geographically they have similarities on the
eastern part of the US as well as Nevada. Boyd could provide a general outlook on the gaming industry domestically
since it’s positioned throughout the US.

Metrics Used

EV/Revenue (30%): This measure signifies the amount of revenue a firm can generate relative to its size.

EV/EBITDA (40%): The EV/EBITDA metric shows the amount of income generated excluding depreciation,
which is a key earnings measure in this industry, given the scale of properties and their life cycles.

EV/OCF (30%): Indicates the amount of cash a company can generate through its day-to-day business operations.

Comparables Results

Following my comparables analysis, and applying the appropriate weights, I derived at a target price of $25.05. This
represents a 5.76% undervaluation from the current LVS price of $23.61.


My DCF analysis consists of projecting revenues based on the geographical markets in which LVS operates. These
include the US, Macau, and Singapore. As there are currently no set plans to expand in other markets, I kept the
revenue projections to include just those three regions.

To determine an appropriate beta for Las Vegas Sands I at first ran a 5-year monthly regression. However, this gave
me a beta of 4.56. This is incredibly high and very unreasonable. I then began running other regressions to see if I
could come up with an appropriate estimate. Due to the recent volatility in the stock price of LVS, I was unable to
find a reasonable beta using regression. As a result, I ran a Hamada to achieve a beta of 1.61. There is guidance from
the company that they will be spending their cash to retire some of their long-term debt. By adjusting their debt-to-
equity ratio, I derived at a terminal beta of 1.29. The beta was drawn down linearly over the timeframe of my DCF.

After all DCF projections were made and assumptions completed, I derived at a target price of $16.51. This led to an
overvaluation of 30.07% on the current stock price of $23.62.


While I do feel that Las Vegas Sands is a very strong company, with great strategic positioning, the volatility and
uncertainty of their revenues is not enough to recommend a buy at this time. Additionally, with a DCF price of
$16.51 and a comparables price of $25.05, I came up with a weighted average price of $20.78, which represents an
overvaluation of LVS’s stock. Regrettably, I am recommending a HOLD in all portfolios.

=>+'?.@>+'A>*1+'()/BC'                                                    ' ' university of oregon investment group


                                                  Comparables Analysis
(Amounts in Thousands)          LVS                WYNN            MGM                  BYD             MPEL
"#$%&'                                                     ()*))+             ,-*))+           -*))+               .)*))+
/0$1#                                       2,.*,3          24,*45             23.*67          23,*()                2(*.(
-,!"##89!:;<=%#>                      25*.,?2,5*-7   2,6*)-?26.*66       2-*.(?235*55    25*6.?23.*6,          2.*,5?24*(-
@&<0#9!AB'9'<=C$=%                         5-5D4.7         3,,D64,            ((3D,()          45D5)3            3D(5-D67(
E#'<                                          3*53            ,*46               (*3.            ,*57                 3*5,
F<08#'!G<H                             23-D,(-D345     23)D36)D,46         25D35(D3,.      23D)7.D4-,           25D.5,D.,7
I='#0H0$9#!J<KB#                       2,3D75,D4(.     233D73,D.,6        234D(34D,)7      2.D-.7D)6.           25D36(D,..
G<9&!<=C!@&L0'!M#0N!O=P#9'N#='9         2.D7-3D4(-      23D7-7D)3-           2(()D-47        23)4D,),             2,3,D-64
QL=%?'#0N!R#S'                         23)D37(D-7(      2.D,76D)--        23,D56(D573      2,D-73D((.              2((D-)(
;#P#=B#!:,)3)I>                         25D,(5D463      2.D7,(D74,         2-D44.D..5      23D6.(D7.6           2,D(.)D)-6
IEOMRT!:,)3)I>                          23D-,4D.7(       2465D.75         23D343D,4)        2.6.D37)             2..5D675
AGU!:,)3)I>                             23D,5(D7,(       2534D.6.           2(67D((4        2,,4D(54             2,.,D.44

Metrics                                                                                                                      "#$%&'#C!TP#0<%#    ONHK$#C!J<KB#        "#$%&'
IJV;#P#=B#                                  .*(4(          .*3((               .*3.3           3*4,4                ,*-(6                 ,*465-               237*77    .)+
IJVIEOMRT                                  3(*,.6         3.*)55              3-*-6,           4*665               34*.4,                3-*)444               2,-*..    ()+
IJVAGU                                     37*,)4         34*6()              .7*),-          3-*(4,               ,5*5--                ,3*54))               2.3*67    .)+
                                                                                                                                                 Implied Price        $25.05
                                                                                                                                                 Current Price         $23.61
                                                                                                                                                 Under (Over) Valued   5.76%

=>+'?.@>+'A>*1+'()/BC'                                                                                      ' ' university of oregon investment group

(In Thousands)                          ,))7T       ,))4T       ,))6T         3W?,)3)     ,)3)I:,W?(W> ,)3)I          ,)33I        ,)3,I        ,)3.I         ,)3(I         ,)3-I         ,)35I         ,)37I         ,)34I        ,)36I         ,),)I
Net Revenues                             ,D6-)D-57 (D.46D6(5 (D-5.D3)-         3D..(D444      (D6..D344    5D,54D)75    7D773D7)6 6D57-D.67     3)D-6,D435    33D((-D(3-    3,D.)7D-37    3.D35)D55)    3.D645D,-.    3(D43,D34(   3-D5,4D)65    35D(46D476
Growth Rate                                    XVT      (4*74+       .*6(+           XVT            XVT       .7*.5+       ,.*66+      ,(*-)+        6*(4+         4*)-+         7*-.+         5*6.+         5*,7+         -*63+        -*-3+         -*-3+
Cost of Revenue                          3D7(-D4(. ,D754D7-, ,D475D47.           4,5D665      .D)-5D33)    .D44.D3)5    (D43(D-7( -D66.D6)4      5D-5,D,(6     7D)6)D(.-     7D5,(D-)7     4D3-.D),6     4D55(D(4(     6D375D3(4    6D543D5)5    3)D,35D.)-
% Of Revenue                                -6*37+      5.*)7+      5.*)-+        53*6-+         53*6-+       53*6-+       53*6-+      53*6-+       53*6-+        53*6-+        53*6-+        53*6-+        53*6-+        53*6-+       53*6-+        53*6-+
Gross Profit                             3D,)(D7,( 3D5,3D36( 3D545D,.,           -)7D46,      3D477D)74    ,D.4(D67)    ,D6-7D3.- .D543D(44      (D).)D-55     (D.-(D64)     (D54.D)3)     -D))7D5.3     -D.,3D756     -D5.5D).5    -D6(5D(63     5D,7.D-7-
Gross Margin                                ()*4.+      .5*6.+      .5*6-+        .4*)-+         .4*)-+       .4*)-+       .4*)-+      .4*)-+       .4*)-+        .4*)-+        .4*)-+        .4*)-+        .4*)-+        .4*)-+       .4*)-+        .4*)-+
Selling General & Administrative           .36D.-7     --)D-,6     -,5D366       3,5D,-6        (55D54)      -6,D6.6      7.-D,)(     63-D,6.    3D)),D)4)     3D)4,D7.5     3D35(D,63     3D,((D664     3D.,.D3))     3D()3D,..    3D(74D(34     3D--6D6(.
% Of Revenue                                3)*4,+      3,*-(+      33*-.+         6*(5+          6*(5+        6*(5+        6*(5+       6*(5+        6*(5+         6*(5+         6*(5+         6*(5+         6*(5+         6*(5+        6*(5+         6*(5+
Depreciation and Amortization              ,),D--7     -)5D645     -45D)(3       3-.D)46        -5,D.4.      73-D(7,    3D333D.-( 3D.5(D,.3      3D.64D,-,     3D.,7D554     3D().D)-7     3D(5)D4..     3D(()D-4(     3D.5,D7,3    3D.3,D75)     3D,,)D,-3
% Of Revenue                                 5*47+      33*--+      3,*4(+        33*(7+          33*(+        33*(+        3(*.+       3(*3+        3.*,+         33*5+         33*(+         33*3+         3)*.+          6*,+         4*(+          7*(+
Operating Expenses                         .-,D4))     ())D)35     5),D7.,        45D7,(        .,)D5-7      ()7D.43      -)-D353     5,4D6)3      544D-..       7(.D6-,       766D646       4--D((.       6)6D3)5       65,D76,    3D)3-D4,5     3D)73D4(,
% Of Revenue                                33*65+       6*33+      3.*,3+         5*-)+          5*-)+        5*-)+        5*-)+       5*-)+        5*-)+         5*-)+         5*-)+         5*-)+         5*-)+         5*-)+        5*-)+         5*-)+
Operating Income (Loss)                    ..)D)3)     35.D55.     :,4D7()>      3(3D4,)        -,7D.-4      556D374      5)-D(35     77.D)5(      6(3D7)3     3D,))D5,(     3D.3-D57(     3D((5D.-7     3D5(4D676     3D6)6D,63    ,D3.6D(45     ,D(,3D-.6
Operating Margin                            33*34+       .*7.+      ?)*5.+        3)*5,+         3)*56+       3)*54+        7*76+       7*66+        4*46+        3)*(6+        3)*56+        3)*66+        33*76+        3,*46+       3.*56+        3(*56+
Interest Income                             7,D(5(      36D745      33D3,,         3D5..
% Of Revenue                                 ,*(5+       )*(-+       )*,(+         )*3,+
Other Income (Expense)                      :,D),.>     3)D.-3     :..D3.6>       :(D,7,>
% Of Revenue                                ?)*)7+       )*,(+      ?)*7.+        ?)*.,+
Interest Expense                           ,((D4)4     (,3D4,-     .,3D47)        74D35-
% Of Revenue                                 4*.)+       6*53+       7*)-+         -*45+
Income (Loss) Before Income Taxes          3--D5(. :,,4D),-> :.7,D5,7>            53D)35        -,7D.-4      -44D.7(      5)-D(35     77.D)5(      6(3D7)3 3D,))D5,( 3D.3-D57( 3D((5D.-7 3D5(4D676 3D6)6D,63 ,D3.6D(45 ,D(,3D-.6
% Of Revenue                                 -*,4+      ?-*36+      ?4*37+         (*-7+         3)*56+        6*.6+        7*76+       7*66+        4*46+    3)*(6+    3)*56+    3)*66+    33*76+    3,*46+    3.*56+    3(*56+
Income Tax Benefit (Expense)               :,3D-63>     -6D7))       .D44(       :3.D,),>       :47D37,>    :3))D.7(>     :6)D43,> :33-D65)>      :3(3D,--> :34)D)6(> :367D.-3> :,35D6-.> :,(7D.(7> :,45D.6(> :.,)D6,.> :.5.D,.3>
Tax Rate                                    3.*47+      ,5*34+       3*)(+        ,3*5(+         35*-.+       37*)5+       3-*))+      3-*))+       3-*))+    3-*))+    3-*))+    3-*))+    3-*))+    3-*))+    3-*))+    3-*))+
Net Income (Loss)                          3.(D)-, :344D75(> :-()D)-)>           :,4D6)->       (()D345      (44D)))      -3(D5)(     5-7D3)-      4))D((5 3D),)D-.) 3D334D.,, 3D,,6D(). 3D()3D5., 3D5,,D467 3D434D-5. ,D)-4D.)4
Net Margin                                   (*-(+      ?(*.)+     ?33*4(+        ?,*37+          4*6,+        7*76+        5*5,+       5*76+        7*-5+     4*6,+     6*)6+     6*.(+    3)*),+    3)*65+    33*5(+    3,*(4+
Add Back: Depreciation and Amortization    ,),D--7     -)5D645     -45D)(3       3-.D)46        -5,D.4.      73-D(7,    3D333D.-( 3D.5(D,.3      3D.64D,-, 3D.,7D554 3D().D)-7 3D(5)D4.. 3D(()D-4( 3D.5,D7,3 3D.3,D75) 3D,,)D,-3
Add Back: Interest Expense*(1‐TR)          ,3)D4(4     .33D.45     .34D-3-        53D,-,                      53D,-,
Operating Cash Flow                        -(7D(-7     5,6D5)4     .5(D-)5       34-D(.5      3D)),D-56    3D,5(D7,(    3D5,-D6-4 ,D),3D..5      ,D364D564     ,D.(4D366     ,D-,3D.76     ,D56)D,.5     ,D4(,D,35     ,D64-D534    .D3.3D.,(     .D,74D--6
% Of Revenue                                34*--+      3(*.(+       7*66+        3.*46+         ,)*.,+       ,)*34+       ,)*6,+      ,)*46+       ,)*75+        ,)*-,+        ,)*(6+        ,)*((+        ,)*.,+        ,)*35+       ,)*)(+        36*44+
Cash and Equivalents                       4-7D3-) .D).4D35. (D6--D(35         .D7-3D4(-      .D7-3D4(-    .D7-3D4(-    (D,7(D(() (D4.7D564      (D755D757     (D-74D355     (D.)7D5.3     .D6(4D364     .D(65D-5.     .D7).D)(5    .D-35D.,,     .D.(-D767
% Of Revenue                                ,6*)-+      56*,3+     3)4*5)+                                    -6*45+       --*))+      -)*))+       (-*))+        ()*))+        .-*))+        .)*))+        ,-*))+        ,-*))+       ,,*-)+         ,)*.+
Current Assets                             -,3D6.5     7).D33.     554D,-4     3D))(D73.      3D))(D73.    3D))(D73.    3D,(-D4)- 3D--)D655      3D564D),4     3D4.(D7))     3D67,D46-     ,D3)6D5-(     ,D,(3D665     ,D.7(D.6.    ,D-)-D34(     ,D5((D3.5
% Of Revenue                                37*56+      35*),+      3(*5(+                                    35*).+       35*).+      35*).+       35*).+        35*).+        35*).+        35*).+        35*).+        35*).+       35*).+        35*).+
Current Liabilities                      3D(6.D,7. 3D-.)D(35 3D4.6D.)-         3D665D375      3D665D375    3D665D375    ,D(7-D,46 .D)43D53(      .D.7.D43,     .D5(-D.5-     .D636D6((     (D363D57)     (D(-(D5,,     (D737D543    (D677D-(6     -D,-,D),7
% Of Revenue                                -)*53+      .(*45+      ()*.3+                                    .3*4-+       .3*4-+      .3*4-+       .3*4-+        .3*4-+        .3*4-+        .3*4-+        .3*4-+        .3*4-+       .3*4-+        .3*4-+
Net Working Capital                       :33(D347> ,D,3)D45) .D74(D.56        ,D75)D.4,      ,D75)D.4,    ,D75)D.4,    .D)((D6-5 .D.)7D)-3      .D)6)D64(     ,D757D-)3     ,D.5)D-4,     3D455D34,     3D,4.D6.4     3D.-6D7-4    3D)(.D6-7       7.7D6)5
% Of Revenue                                ?.*47+      -)*.5+      4,*6.+                                    ((*)(+       .6*34+      .(*34+       ,6*34+        ,(*34+        36*34+        3(*34+         6*34+         6*34+        5*54+         (*(7+
Change in Net Working Capital                  XVT ,D.,-D)(7 3D-7.D-)6                                    :3D),.D647>     ,4(D-7(     ,5,D)6-     :,35D)57>     :.,.D(4,>     :()5D6,)>     :(6(D())>     :-4,D,((>       7-D4,)     :.3-D4),>     :.)5D)-3>
Less: Capital Expenditures               .D76.D7). .D746D))4 ,D)6,D465           -.4D,)3      3D34.D65-    3D7,,D355    3D.64D6)4 3D(-3D.3)      3D,73D3.4     3D3((D-(3     3D,.)D7-,     3D34(D(-6     3D334D6))     3D34(D67-    3D,(6D(55     3D.,)D)3-
% Of Revenue                               3,4*-4+      45*.3+      (-*47+        ()*.,+         ,(*))+       ,7*(4+       34*))+      3-*))+       3,*))+        3)*))+        3)*))+         6*))+         4*))+         4*))+        4*))+         4*))+
Free Cash Flow                          :.D,(5D,(5> :-D(4(D((7> :.D.)3D466>                                  -55D-(-      :-7D-,.>    .)7D6.3    3D3(.D5,7     3D-,7D3.6     3D567D-(7     ,D)))D377     ,D.)-D-5)     3D7,(D4,.    ,D367D5-6     ,D,5(D-6-
PV of FCF                                                                                                    -,.D4-3      :(4D)3->    ,.,D-64      74.D5.5       6-3D-46       65(D.34     3D).4D.(7     3D)65D(5-       7-.D.35      44.D7,4       4()D.7.

=>+'?.@>+'A>*1+'()/BC'                                    ' ' university of oregon investment group


    3)!Y#<0!M0#<9B0Z     .*(,6+             M#0N$=<K![0L\'&!;<'#                  .*))+
    E#'<!:]<N<C<>           3*53            M#0N$=<K!J<KB#               2.-D),7D7.)*46
    F<08#'!;$98!/0#N$BN   7*))+             /J!M#0N$=<K                  23,D666D5(-*4(
    +!I^B$'Z             5)*.4+             Σ PV of Free Cash Flow        24D),)D,)7*).
    +!R#S'               .6*5,+             QL=%!M#0N!R#S'                  23)D37(D-7(
    ;#'B0=!L=!R#S'        5*.(+             U$0N!J<KB#                   2,3D)36D4-,*47
    ;#'B0=!L=!I^B$'Z    3(*566+             @&<0#9!AB'9'<=C$=%                  5-5D4.7
    "TGG                33*)3,+             Implied Price                         $16.51
    M#0N$=<K!Y#<0!E#'<      3*,6            Current Price                         $23.61
    M#0N$=<K!Y#<0!"TGG    6*55+             Undervalued                         ‐30.07%

=>+'?.@>+'A>*1+'()/BC'                             ' ' university of oregon investment group


       Company                                         Weight
                              Beta D/E ratio Standard Error       Variance
       MPEL                      3*5,    )*46   )*(()5      ,)+    )*36(3,4
       WYNN                      ,*46    )*.4   )*(36,      ,)+    )*37-7,6
       MGM                       (*3.    ,*(.     )*63      3-+      )*4,43
       BYD                       ,*57    ,*-( )*-(374       3-+    )*,6.-,5
       ASCA                      3*7-    3*-6   )*..54      3-+    )*33.(.(
       ISLE                    ,*-57     .*74 )*--435       3-+    )*.33-(.

       Mean                      ,*-7    3*6.     )*--            )*.)-65,
       Median                  ,*534-    ,*)3

       Pure Business Beta      ,*534-
       Sample D/E                ,*)3
       Unlevered Business Beta   )*67
       LVS D/E                   )*74
       LVS Beta                  3*53

=>+'?.@>+'A>*1+'()/BC'                                                                                      ' ' university of oregon investment group


:O=!M&LB9<=C9>      ,))7T ,))4T ,))6T ,)3)I                     ,)33I      ,)3,I      ,)3.I       ,)3(I       ,)3-I       ,)35I       ,)37I       ,)34I       ,)36I       ,),)I
Geographic Location
_=$'#C!@'<'#9         264(D3,- 23D..-D)., 23D,-.D-37 23D5)3D66- 23D74.D),) 23D67(D56- 2,D3-7D.-( 2,D.)4D.56 2,D(-,D5(, 2,D-7-D,7( 2,D574D,4- 2,D74-D(35 2,D465D4.. 2.D)3,D7)5
+!L`!ML'<K!;#P#=B#     ..*.-+ .)*(3+ ,7*(7+ ,-*-5+ ,,*6(+ ,)*(3+                          ,)*.7+      ,)*37+      36*6.+      36*-7+      36*3-+      34*4)+      34*-(+      34*,7+
+![0L\'&                  XVT .-*55+ ?5*33+ ,7*4)+ 33*.)+ 3)*7-+                            6*,-+       7*))+       5*,-+       -*))+       (*))+       (*))+       (*))+       (*))+
F<1<B               23D655D((, 2.D)-(D63( 2.D.)6D-44 2.D4(-D7(3 2(D675D.46 25D-7.D43) 27D,)(D465 27D4)(D.(. 24D(,)D445 26D)-,D(-. 26D545D3,- 23)D.3-D7,. 23)D6.(D555 233D-6)D7(5
+!L`!ML'<K!;#P#=B#     55*5-+ 56*-6+ 7,*-.+ 53*.-+ 5(*).+ 57*6(+                          54*),+      54*36+      54*(,+      54*74+      56*,-+      56*5(+      56*67+      7)*,6+
+![0L\'&                  XVT --*.-+          4*.(+ 35*,)+ ,6*()+ .,*3)+                    6*5)+       4*.,+       7*6)+       7*-)+       7*))+       5*-)+       5*))+       5*))+
@$=%<HL0#                   2)         2)         2) 24,)D.() 23D)3,D.)) 23D3,5D46, 23D,.)D-55 23D..,D7). 23D(..D644 23D-.,D6.( 23D5,3D4(( 23D733D)(- 23D765D-67 23D445D(,7
+!L`!ML'<K!;#P#=B#      )*))+      )*))+      )*))+ 3.*)6+ 3.*).+ 33*5-+                  33*5,+      33*5(+      33*5-+      33*5-+      33*5)+      33*--+      33*-)+      33*((+
+![0L\'&                  XVT        XVT        XVT        XVT ,.*()+ 33*.,+                6*,)+       4*.)+       7*5)+       5*6)+       -*4)+       -*-)+       -*))+       -*))+
ML'<K!;#P#=B#       2,D6-)D-57 2(D.46D6(5 2(D-5.D3)- 25D,54D)75 27D773D7)6 26D57-D.67 23)D-6,D435 233D((-D(3- 23,D.)7D-37 23.D35)D55) 23.D645D,-. 23(D43,D34( 23-D5,4D)65 235D(46D476
+![0L\'&                  XVT (4*74+          .*6(+ .7*.5+ ,.*66+ ,(*-)+                    6*(4+       4*)-+       7*-.+       5*6.+       5*,7+       -*63+       -*-3+       -*-3+


=>+'?.@>+'A>*1+'()/BC'                       ' ' university of oregon investment group


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