Macau (MNA) – There was a general optimistic consensus among main brokerage firms focusing on the local market after gaming operator Wynn Macau released results exceeding expectations, as MNA published on Tuesday.
Union Gaming raised the price target on the operator’s performance in the Hong Kong market to HK$32, as it adds improved local sentiment to the results. In the same line of optimism Sandford Bernstein kept the outperform mark for the operator.
The strong performance of the Cotai property was highlight by analysis. According to a Union Gaming report Wynn Palace ‘eclipsed Wynn Macau at the top line for the first time and bodes well for the continued ramp up of Cotai.’
Bernstein research also highlights the figures by the Palace property stating that ‘the ramp up at Wynn Palace was anchored by strong share taking in mass.’
‘Wynn Palace should continue to show solid ramp up over the next several quarters while Wynn Peninsula remains the top performing peninsula property and grows share at that property,’ states the Bernstein report.
Brokerages, however, show caution amid the impact of the development of Phase II of Wynn Palace. Although they consider it will play a decisive role in the long term, and despite comments by Steve Wynn as reported by MNA, the research reports did not add to their valuations. Many factors, including concession renewal, are still undefined.
Union Gaming sees full year 2018 results for Wynn increasing 23 per cent (VIP up 25 per cent/ mass up 22 per cent). ‘Given what we anticipate to be VIP / mass growth rates closer to parity this year we would expect margin improvement on revenue mix, in addition to margin improvement as Wynn Palace gets more efficient,’ the Union Gaming report says.
On the other hand, the possible risks seen by Bernstein include slower performance of Wynn Palace as new casinos will open, ‘greater than expected cannibalization of Wynn Peninsula’ and worse than forecast VIP data.
