Wynn’s Macau 4Q GGR outpaces despite competition

Wynn Macau Ltd outperformed the rest of the Macau casino market in the fourth quarter in terms of sequential growth in gross gaming revenue, according to a Thursday note from JP Morgan Securities (Asia Pacific) Ltd.

It followed the results issued on Wednesday by the United States-based parent Wynn Resorts Ltd for the three months to December 31.

Regarding cautious commentary from the parent about when Wynn Macau Ltd might restart dividend payments, analysts DS Kim, Mufan Shi, and Selina Li wrote: “We continue to expect the timing of payment to be next year, i.e., fiscal year 2024 dividend to be paid in calendar 2025, possibly from March 2025 if history is any guide.”

The Wynn group’s Macau business – which runs Wynn Macau downtown, and Wynn Palace on Cotai – had “solid market share” in the fourth quarter, which was “better than most feared” under circumstances of intensified competition for higher-value players, said JP Morgan.

Wynn Macau Ltd’s GGR for the three months “grew 12 percent quarter-on-quarter versus the industry’s 8 percent quarter-on-quarter,” wrote the JP Morgan team.

The analysts added: “Mass GGR was up 11 percent quarter-on-quarter, to be 17 percent above pre-Covid, versus the industry’s +11 percent quarter-on-quarter,” which had been 5 percent above pre-Covid.

Wynn Macau Ltd’s VIP GGR, “albeit much less important”, also outperformed the rest of the city’s industry, at +11 percent sequentially, versus the market’s overall “high-single digit” percentage growth, as judged by JP Morgan estimates.

The quarterly numbers were “very respectable considering the ramp in new supplies by the peers” of the company, said the brokerage.

JP Morgan said examples of fresh competition in operation during the quarter included Galaxy Entertainment Group Ltd’s Phase 3 of its Galaxy Macau resort on Cotai. Within the structure of the hotel tower for the new Raffles at Galaxy Macau accommodation, is a high-end gaming area.

The brokerage also mentioned Studio City on Cotai, promoted by Melco Resorts & Entertainment Ltd. Its Phase 2 features two new hotels, including its own-branded Epic Tower, which has a fresh premium mass table games area branded Qi Long. Last month Citigroup mentioned it had enjoyed a “solid debut” with players.

JP Morgan also mentioned that Wynn Macau Ltd’s property earnings before interest, taxation, depreciation and amortisation (EBITDA) of circa US$297 million, had beaten its own forecast and market consensus of US$280 million to US$285 million by at least 6 percent.

“This was partly helped by favourable VIP luck (+US$7 million), but even its hold-adjusted EBITDA (US$290 million) came in better than estimates with solid details, particularly on the margin side,” said the brokerage. It noted that fourth-quarter EBITDA margin improved 150 basis points quarter-on-quarter to 32.6 percent, based on net/reported sales.

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