Wynn Resorts Limited has announced that net revenues for the first quarter of 2016 amounted to US$997.7 million, a decrease of 9 per cent compared to US$1.09 billion posted in the first quarter of 2015, according to a filing with the Hong Kong Stock Exchange. The decline was attributed to a 13.8 per cent decrease in Macau operations – under Wynn Macau Limited, of which it holds approximately 72 per cent. The local division generated US$608.2 million in net revenue for the first quarter of the year, compared to the US$705.4 million in the first quarter of 2015, the smallest quarterly decline in revenue from Macau since the third quarter of 2014, according to the report.
Adjusted property EBITDA for Wynn Resorts (earnings before interest, taxes, depreciation and amortization) in the first quarter of 2016 was US$300.3 million, down 7 per cent year-on-year and the group registered a profit of US$75.2 million for the quarter, compared to a net loss of US$44.6 million in the first quarter of 2015.
In the group’s Macau operations table games turnover in the VIP segment amounted to US$13.47 billion, a 21.4 per cent drop from the first quarter of 2015. Nevertheless Wynn Macau results were in line with pre-announcements on April 5, analysts said.
VIP and mass market also showed quarter-to-quarter improvement, with a 12 per cent and 8 per cent increase, respectively, with Wynn management calling April a ‘very steady month’ claiming Macau results were helped by favourable Labour Day timing and high table hold with Wynn Macau’s executive director Ian Coughlan saying the “worst seems to be over” in a conference call with analysts.
The Wynn report also showed Macau debt comprised US$4.20 billion, or 44 per cent of the group’s total debt outstanding, with Union Gaming Securities Asia Ltd. considering the full collection of a single US$8 million junket debt a sign that ‘perhaps a better junket liquidity ability to raise cash than commonly thought, and more importantly speaks towards the desire for those participating in VIP and premium segments to want to do business at Wynn.’
Sanford C. Bernstein believes improvement continues with the mid-tier mass market growing and the VIP market stabilising, with the planned opening of Wynn Palace in August a ‘key inflection’, although no official date for the opening has been announced yet.
Premium soul
‘During the first quarter of 2016, we invested approximately US$177.5 million in Wynn Palace,taking the total investment to US$3.7 billion through March 31 […] we expect to open Wynn Palace in the third quarter of 2016,’ the repot noted.
The property had originally been slated to open on March 25 and then June 25 with Deutsche Bank Securities Inc’s analysts believing a ‘late July/early August opening’ to be reasonable.
Telsey Advisory Group also placed great importance upon the new Cotai property, observing that ‘although it will compete with MPEL’s new US$3.2 billion Studio City opened late last year, the US$1.5 billion The 13 [formerly known as Louis XIII, opening late Summer] and Las Vegas Sands US$2.7 billion Parisian [opening in September or October of this year], Wynn expects to capture its fair share of what should be a modestly higher market in 2017’, with the analyst group estimating the Palace will generate a consolidated revenue of US$4.57 billion and a property EBITDA of US$1.29 billion in 2016.
“We expected a competitive environment, but Wynn Palace was designed to appeal to the heart and soul of the premium player in Macau. Studio City was designed to appeal to the mass, while The Parisian has a bulk of rooms much smaller than ours. We’ve seen and studied the competition in Macau and respect and have admiration for their execution; but I’ll say it another time – we’re not in that zip code, it will appeal to the player that plays an average of HK1000 to a million,” Steve Wynn CEO of Wynn Resorts stated in a conference call after the quarter report.
Union Gaming believe the VIP growth means Wynn Macau is going in the right direction before the opening of Wynn Palace but still warns of a negative market-wide VIP outlook.
Revenue from VIP gaming in Macau casinos fell 19.35 per cent in the first quarter of the year, at MOP30.38 billion (US$3.8 billion), compared to the same months in 2015, as reported by Macau Business Daily.
