Japanese brokerage Nomura says Wynn Macau Ltd’s expectations for its upcoming Cotai project seem “very bullish”. The brokerage stated in a note on Thursday it was sceptical on the pace of ramp-up forecast by the casino operator for the scheme.
The US$4.1-billion Wynn Palace (pictured) was scheduled to open on June 25, after a plan to launch it on March 25 was dropped. But company chairman Steve Wynn said on Wednesday the property was likely to only open in August.
“Management’s expectation for the Wynn Palace property seems very bullish, with the US$630 million to US$850 million 2017 property EBITDA [earnings before interest, taxation, depreciation and amortisation] forecast 94 percent to 162 percent higher than our estimated EBITDA of US$324 million for 2017,” the Nomura team stated.
The management of Wynn Resorts Ltd – the parent of Wynn Macau – presented the estimates on Wednesday at an investor presentation in Las Vegas, Nevada.
The brokerage added: “We have no doubt in the quality of the upcoming Wynn Palace property… but we are less confident in the profitability and the pace of ramp-up with the weak demand environment, excessive table capacity in Macau and the slow ramp at the two new openings [in Macau] in 2015.”
The two properties opening in Macau last year included: the second phase of casino resort Galaxy Macau, inaugurated in May by Galaxy Entertainment Group Ltd; and Studio City, majority-owned by Melco Crown Entertainment Ltd, which opened doors in October.
The Macau government on April 1 announced that market wide in Macau, accumulated casino gross gaming revenue (GGR) for the first quarter of 2016 was nearly MOP56.18 billion (US$7.03 billion), a 13.3 percent decline year-on-year. March was the 22nd straight month of citywide GGR retreat measured year-on-year.
The Nomura team also explained its “relative conservatism” regarding Wynn Palace with the “slow ramp” experienced by Wynn Encore Las Vegas. The property, opened in Nevada by Wynn Resorts in December 2008, failed to generate “any substantial incremental EBITDA until 2011, eight quarters after the opening,” Nomura stated.
Telsey Advisory Group had a different view on the forecasts provided by Wynn Macau and its parent. Following the announcement, the brokerage increased its 2017 EBITA forecast for Wynn Resorts to US$1.60 billion from US$1.35 billion.
“We are particularly focused on the strong expectations for the [Wynn] Palace and resulting earnings growth and cash flow inflection,” analysts David Katz and Brian Davis wrote in a note issued on Thursday.
Apr 25, 2018Casino gaming equipment maker Konami Gaming Inc says its Synkros casino management system has been chosen by Carnival Corp & Plc, a global operator of cruise ships, including vessels that have...
Apr 25, 2018
Apr 25, 2018
Jan 04, 2018BMM Testlabs “ticks all the boxes” with regard to its...
Dec 08, 2017The regulated casino industry is well versed in dealing...
Oct 23, 2017The presence of some of the leading cloud computing...
Jul 11, 2017The Tokyo local election setback for Japan’s governing...
Jul 06, 2017A multibillion U.S. dollar casino project on Vietnam’s...
First quarter net income recorded by Crane Co, a supplier of payment and merchandising technology to the gaming industry