Macau casino operator Wynn Macau Ltd’s free operating cash flow is likely to remain positive in fiscal year 2025, and be sufficient to cover the company’s expected incremental capital expenditure within the year. That is according to analysts at CreditSights, a credit research specialist, writing in a Friday memo.
The memo was issued following the fourth-quarter 2024 results of Wynn Macau Ltd, disclosed by its U.S. parent Wynn Resorts Ltd. The group’s unit runs the Wynn Macau resort in downtown Macau, and Wynn Palace in the newer Cotai casino district.
In a fourth-quarter presentation, Wynn Resorts mentioned that its Macau capital expediture (capex) this year would be in the range of US$250 million to US$300 million. For 2026, it was estimated at between US$450 million and US$500 million. The figures cover several concession-related investment projects at Wynn Palace, including a new food hall, plus an event and entertainment centre, as well as a theatre and resident show.
Wynn Macau Ltd had in addition, US$70-million to US$80-million of maintenance capital spending projected for the current fiscal year, according to the presentation deck.
The Macau casino operator had, in fiscal year 2024, incurred US$165 million in capital spending.
Nicholas Chen and David Bussey of CreditSights wrote: “While the full breakdown of Wynn Macau [Ltd’s] cash flow items was not disclosed at its parent’s preliminary fourth-quarter 2024 results, we note that Wynn Macau’s free operating cash flow generation turned positive post [the pandemic period] reopening. to HKD2.8 billion/HKD2.2 billion (circa US$359 million/US$283 million) in 2023/first half of 2024.”
CreditSights is a division of financial services business Fitch Group.
Its analysts added: “Given the stronger EBITDAR [earnings before interest, taxation, depreciation, amortisation, and rent] in fiscal year 2024″, up circa 23 percent year-on-year, as well as continued if moderating EBITDAR growth, “we expect Wynn Macau [Ltd] to maintain positive FOCF [free operating cash flow] in fiscal year 2025 and sufficiently cover the incremental expected capex this year.”
Wynn Macau Ltd’s full-year 2024 EBITDAR was US$1.2 billion, which reached 85 percent of 2019’s US$1.4 billion. The Macau casino operator’s 2024 EBITDAR margin stood at 31.9 percent, an improvement from 2023’s 30.8 percent and 2019’s level of 29.8 percent.
CreditSights said it expects Wynn Macau’s overall EBITDAR margin to remain “steady in the low-30s range” in the current fiscal year.
Mr Chen and Mr Bussey added regarding Wynn Macau Ltd: “The company’s ongoing development work regarding the food destination hall at Wynn Palace is expected to provide a lift to its top line and EBITDAR in second half 2025, once completed.”
Though they added that would be “marginally” as food and drink “contributes only a token 6 percent of the overall top line”. They mentioned that planned completion date for such work was mid-2025.
Leveraging improving
In fiscal year 2024, Wynn Macau Ltd had seen improvement in its leverage situation, which was mainly due to redemption of its US$600-million, 4.875-percent 2024 notes in October, flagged CreditSights in the Friday memo.
As at December-end, Wynn Macau Ltd’s total debt was reduced to US$5.9 billion, versus US$6.5 billion as of September-end. Its unrestricted cash balance was at US$1.5 billion as of December-end, compared to US$1.3 billion as at September-end.
CreditSights added of Wynn Macau Ltd: “The company’s liquidity position is also bolstered by US$354 million of available revolver borrowing capacity.
“Total debt/LTM [last twelve months] EBITDAR and net debt/LTM EBITDAR improved to 5.0 times and 3.7 times respectively in fiscal year 2024.”
As of September 2024 those indicators had been at 5.5 times and 4.3 times respectively. The improvement was “mainly owing” to the debt reduction, wrote CreditSights.
Nonetheless, Wynn Macau Ltd’s latest leverage indicators were still above pre-pandemic 2019 levels, said the institution. In that year, the casino operator’s total debt/LTM EBITDAR had been 3.6 times, and net debt/LTM EBITDAR had been recorded at 2.9 times.
