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Wynn Resorts results above expectations

Casino operator Wynn Resorts has reported results above analyst expectations, attributed mainly to an increase from Macau operations.

According to its financial statement, more than half of Wynn Resorts’ net revenues of $1.1 billion for the second quarter of 2016 came from Macau - which rose 3.6 percent to $639.3 million for the second quarter of 2016.

Meanwhile, adjusted property EBITDA was $190.4 million, an increase from $173.4 million from the same period in 2015.

Morgan Stanley said that while 16Q2 EBITDA was above consensus by 7 percent / 9 percent, this was due to a 4 percent win rate.

“High win rate of 3.98 percent in VIP helped EBITDA by $20 million, without which EBITDA of $170 million met consensus and missed our estimates (US$177mn) slightly. Key point is the underperformance in mass and slot revenue decline of 10 percent quarter-on-quarter vs. market decline of 4 percent.” said the brokerage.

In regards to Wynn Palace, which is scheduled to open on August 22, the operator said it believes that it will receive approximately 100 table games for Wynn Palace, and additional tables will be allocated post-opening.

“While we have not yet received formal notification of our table games allocation, if we receive an allocation of 100 new table games, we expect to move approximately 250 table games from Wynn Macau to Wynn Palace resulting in approximately 350 table games at Wynn Palace and 270 table games at Wynn Macau,” said the operator.

However, Morgan Stanley said that 100 new tables would be a negative surprise and shifting tables from Peninsula will cannibalize EBITDA.

“While staff/table transfer from Wynn Macau will save ~$20 million in 3Q16, we/market will be negatively surprised by only 100 new tables allocated to a $4.2 billion project. Even though Wynn claimed that only one-third of VIP tables are profitable, shifting 250 tables from Peninsula will cannibalize EBITDA meaningfully in our view. We hope it will receive another 150 new tables after the opening, without which we see meaningful cuts in EBITDA estimates,” said the brokerage.

Wynn Resorts has also announced a cash dividend of $0.50 per share, payable on August 23, 2016 to stockholders of record as of August 11, 2016.

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