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Vendor enterprise value omits the non-controlling interest, so EV/EBITDA reads too cheap on any parent with a listed subsidiary
Claim
EV must include every claim on the consolidated cash flows: equity, net debt, preferred, and non-controlling interest. The vendor composite stops at net debt. The EBITDA it is paired with does not — it is the fully consolidated figure, including the minority's share.
Evidence — LVS, 2026-09-16
| Vendor | Corrected | |
|---|---|---|
| Market cap | $26.6B | $26.6B |
| Net debt | $11.7B | $11.7B |
| Sands China 28% minority (HKEX market value) | omitted | ~$4.5B |
| EV | $38.8B | ~$42.8B |
| EV / TTM adj property EBITDA (~$5.2B) | 7.5x | 8.2x |
A 0.7-turn understatement, ~10% of EV. Enough to move a name from "below the bear case" to "in the base case." The same error is in every casino peer comparison (WYNN, MGM) because each parent lists its Macau subsidiary, so a vendor-EV peer table is wrong on all three by different amounts.
How to apply
- If the balance sheet shows a material
minorityInterestline, the vendor EV is wrong. - If the subsidiary is listed, value the minority at its market cap × minority stake. If not listed, use book value as a floor and say so.
- Recompute EV by hand and state the bridge in the report.
Related: [[pitfall-vendor-ev-inverts-net-cash]] (a different EV error — stale market cap), [[pitfall-currency-mixed-ev-is-invertible-on-adrs]] (a third — currency mixing).