Net profit at casino operator Wynn Macau Ltd rose by 119.2 percent in the first quarter of 2018, to US$227.1 million.
The announcement – in accordance with International Financial Reporting Standards (IFRS) – was made by the Hong Kong-listed firm, following the first-quarter results disclosure by the parent Wynn Resorts Ltd.
Wynn Macau Ltd reported operating revenues of nearly US$1.28 billion for the three months ended March 31, up by 27.8 percent year-on-year. Casino revenue for the period increased by 28.0 percent year-on-year to nearly US$1.11 billion.
During a conference call following Wynn Resorts’ results announcement, Matt Maddox – chief executive of the parent firm and of Wynn Macau Ltd – announced a planned US$100-million investment to revamp the Wynn Macau property on Macau peninsula (pictured), to start this year. That would include “reinvigorating” the original casino at the property’s first tower, and “taking out a lot of the exterior junket space that is not productive,” Mr Maddox said.
The revamp is to add two new restaurants to the Wynn Macau casino-hotel and remodel the hotel rooms in its Encore tower.
The firm was also working on “two new restaurant concepts” for Cotai’s Wynn Palace casino resort, with construction scheduled to begin this year. Mr Maddox added that the company was still assessing development possibilities for its unused available land surrounding Wynn Palace.
Mr Maddox added that the Wynn group would also be “spending more time and more resources” in Japan, as the local authorities move to introduce a casino industry to the country. The firm was already talking with “potential consortium partners”, he said.
Mr Maddox also commented during the conference call on events affecting the Wynn group following allegations of sexual misconduct against its founder and former chairman and chief executive Steve Wynn. Mr Wynn has denied the claims against him, but resigned from the group in February and has since sold his entire stake in the firm.
Mr Maddox stressed in his comments to investment analysts that the firm was “not for sale” following Mr Wynn’s exit. He added: “As CEO, I am not interested in looking at the rear-view mirror… I am only focused in the future”.
“Executive management has not only been focused on maintaining and enhancing the operations of the business and stabilising the culture, but in reducing the noise surrounding our business,” he added.
The executive also commented on the acquisition by Galaxy Entertainment Group Ltd of a 4.9-percent stake in Wynn Resorts Ltd, announced in March. “They are long-term investors,” said Mr Maddox. He hinted the two firms could “potentially work together” in assessing business opportunities in fresh markets but stressed no agreement in that regard existed yet.
Looking at Wynn Macau Ltd’s first-quarter results,, Mr Maddox highlighted the business ramp-up of Wynn Palace in the mass market. “At Wynn Palace, we continued to aggressively take share in the mass market; and it wasn’t only in the premium end,” he stated.
At Wynn Palace, the firm’s Cotai district property, operating revenues – on a U.S. generally accepted accounting principles – were US$665.8 million for the first quarter of 2018, up 47.2 percent from the same period of 2017. Adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) stood at US$211.9 million for the first quarter of 2018, an 89.4 percent increase from US$111.9 million for the same period of 2017.
Casino revenue from Wynn Palace was US$568.5 million for the first quarter of 2018, a 50.7-percent jump from US$377.1 million for the same period of 2017. Table games turnover in VIP operations was US$15.39 billion, a 39.3 percent increase from US$11.04 billion for the first quarter of 2017. Table drop in mass market operations was US$1.22 billion, a 58.1 percent increase from the first quarter of 2017.
Non-casino revenues from Wynn Palace were US$97.4 million for the first quarter of 2018, a 29.5 percent increase from US$75.2 million for the same period of 2017.
Operating revenues from Wynn Macau on the peninsula were US$618.2 million for the first quarter of 2018, an 11.9 percent increase from US$552.7 million for the same period of 2017. Adjusted property EBITDA was US$209.8 million for the three months ended March 31, a 15.9 percent year-on-year increase from US$181.1 million for the same period of 2017.
Casino revenues at Wynn Macau were US$539.0 million for the first quarter of 2018, a 10.5 percent increase from US$488.0 million for the same period of 2017. Non-casino revenues stood at US$79.2 million for the first quarter of 2018, a 22.3 percent increase from US$64.7 million for the same period of 2017.
“Wynn Macau Ltd first quarter 2018 adjusted property EBITDA of US$422 million (+12 percent quarter-on-quarter, 44 percent year-on-year) missed our/consensus estimates of US$436 million/US$430 million, but mass market gains and margin improvement continues, noted investment bank Morgan Stanley in a Wednesday note.
Group-wide, Wynn Resorts reported a net loss of US$204.3 million for the first quarter of 2018, compared to net income of US$100.8 million in the prior-year period. “The change was primarily due to the US$463.6 million litigation settlement expense and a US$69.3 million increase in the redemption note fair value to its principal amount,” the firm said. Adjusted net income attributable to Wynn Resorts was US$237.0 million for the first quarter of 2018, compared to US$130.9 million.
Last month, Wynn Resorts agreed to pay a total of US$2.4 billion to settle a stock redemption dispute with Aruze USA Inc and the latter’s parent company, Universal Entertainment Corp.
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"The [Macau] government has a lead in this subject in regards to what should be done after the [gaming] concessions expire. We will be first listening to what the government will say”
Ambrose So Shu Fai
Vice-chairman and chief executive at Macau casino operator SJM Holdings