While Wynn Palace’s opening missed expectations, the market may be underestimating its long-term potential, said Morgan Stanley in a note on Sunday.
“The opening of Wynn Palace, a US$4.3 billion project and the most expensive casino ever built in Macau (per hotel room basis), has been disappointing, and consensus may revise down EBITDA expectations for 2017,” said the brokerage, adding that a slow ramp up of Wynn Palace’s mass business is to blame.
“However, we believe that as this is priced into 3Q16 results, we see a buying opportunity emerging for the stock, especially for longer-term investors,” they said.
“We expect consensus to revise down its 2016/17 earnings, but this could reverse in future due to high operating leverage, resumption of market mass revenue growth and rectification of initial operational issues.”
The analysts added it expects Wynn Macau EBITDA to grow from $676 million in 2016 to $961 million in 2018, with Wynn Palace to achieve EBITDA of $433 million in 2018.
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