Wynn Macau has announced its preliminary expectations of its financial results for the first quarter, outperforming analysts’ expectations, principally in adjusted property EBITDA (net income before interest, taxes, depreciation and amortization), which is estimated by Wynn Macau to be between US$187 million (MOP1.5 billion) and US$195 million, revealed a filing with the Hong Kong Stock Exchange yesterday. This came as a positive indication for Wynn Macau, given its steady fall in stock price since the first quarter of 2014, halted by a rise starting in the first quarter of this year, and prompting analysts to hope for a stabilisation. Adjusted property EBITDA outperforms Estimates for adjusted property EBITDA came in 13 per cent to18 per cent higher than Bernstein’s estimates (who ranked the company ‘Outperform’ in January) of US$166 million, which the brokerage attributes to a ‘more favourable business mix’ per their April 6 report. Bernstein analysts believe that this is due to an overestimated VIP and underestimated Mass Gross Gaming performance. The brokerage, however, points out that it believes part of the underestimation could be due to a ‘shift of costs from operating expenses into pre-opening expenses’, due to the labor movement from Wynn Macau to Wynn Palace. The brokerage expects a ‘strong margin’ in the second quarter as operating cost ‘is shifted to Wynn Palace’. Wynn Macau’s adjusted property EBITDA also outperformed Wells Fargo, Union Gaming, Tesley Advisory Group and Deutsche Bank, who estimated US$147 million, US$165 million, US$182 million and US$177 million, respectively. Mixed review on revenue The group announced preliminary expectations on revenue in ‘the range of US$603 million to US$613 million’, a 14 per cent drop year-on-year but beating Union Gaming’s estimates of US$588 million. The group predicts sequential growth of 9 per cent compared to the fourth quarter of 2015, noting that the ‘strength in mass’ from the fourth quarter of 2015 carried over into the first quarter of the year, leaving mass market gross gaming revenue at US$247.5 million. Deutsche Bank saw the mass market values in line with their forecast, but VIP revenues fell ‘US$35 million below our estimate’, coming in at US$378.7 million, nearly US$100 million less than the same quarter of last year but still accounting for 56 per cent of gross gaming revenue, which Bernstein labels similar to Q1. VIP turnover down, slots up, hotel full Rolling chip turnover for the VIP segment was down 21 per cent year-on-year but up 3 per cent compared to last quarter, at US$13.47 billion. The win rate came in at 2.8 per cent, which Union Gaming labels a ‘normalised range’ and sees the overall chip turnover as ‘likely better than the market as a whole during the quarter’. Slots recorded a 5.5 per cent year-on-year increase, coming in at US$50.4 million in gross gaming revenue and accounting for a 4.6 per cent hold, the same recorded in the same quarter of last year. The occupancy rate for the period was estimated at 94.8 per cent, with a hotel average daily rate (ADR) remaining relatively flat, says Bernstein, at US$324, with revenue per available room (RevPar) down 1 per cent quarter-on-quarter and 5 per cent year-on-year. Investment Wells Fargo sees “equal risk/reward given near term uncertainty” and expects an update later following Wednesday’s Wynn Investor Day, held in Las Vegas. Bernstein sees that the ‘overall result is positive to the stock’ but that due to a ‘lack of clarity around margin and the Macau stocks taking a breather after a strong YTD (year to date) performance’ the stock will likely not outperform.