Jan 23, 2018 Newsdesk Latest News, Macau, Top of the deck
Fourth-quarter profit at Macau casino operator Wynn Macau Ltd was nearly triple year-on-year, at US$179.23 million, buoyed by good performance at Wynn Palace on Cotai (pictured), the company announced on Monday. Such Macau profit rose from nearly US$46.61 million in the prior-year period, as measured under international financial reporting standards (IFRS), said the Macau unit in a filing to the Hong Kong Stock Exchange.
In comments on Monday to analysts regarding the fourth quarter and full-year results for Wynn Macau Ltd and its parent, Wynn Resorts Ltd, founder Steve Wynn said he had a “great deal of confidence” about the prospect of the Macau unit being able to maintain access to gaming rights after the firm’s current concession ends in 2022.
He added he had been “given reason to have confidence” based on his conversations with the Macau government.
“We have been given reason to have confidence that that our businesses will continue after the initial concession expiration date. That confidence is based upon the kinds of conversations we have with the [Macau] government,” said Mr Wynn on a conference call.
“We’ve always been bullish about Macau … the depth and the foundational strength of that market is real,” he added.
JP Morgan Securities (Asia Pacific) Ltd analysts DS Kim and Sean Zhuang said in a Monday note: “This also allows the company to proceed with phase two of Wynn Palace, though not much detail is provided at this point.”
Mr Wynn had said in the earnings call: “We have been encouraged by the government in conversations with them to file our plans for [Wynn Palace] phase two which we’re working on now.”
On a U.S. generally accepted accounting principles (GAAP) basis, the parent, U.S.-based Wynn Resorts, separately reported on Monday fourth-quarter net income more than triple that of a year earlier, to US$491.68 million, from US$113.80 million; and full-year 2017 net income that more than doubled, to US$747.18 million, from nearly US$241.98 million in the prior year.
Net revenues for the full year at Wynn Resorts were US$6.31 billion, an increase of 41.2 percent from US$4.47 billion for the same period of 2016. The increase in net revenues was the result of increases of US$1.56 billion, US$221.7 million and US$62.5 million from Wynn Palace, Wynn Maca and the Las Vegas Operations, respectively, said the company.
Wynn Resorts declared a cash dividend of US$0.50 per share, payable on February 27, to stockholders of record as of February 15.
The Macau operation’s net revenues for the final three months of 2017 were US$1.31 billion on an IFRS basis, an increase of 43.1 percent from US$917.1 million for the same period of 2016.
Net revenues for the parent were US$1.69 billion in the three months to December 31, an increase of 29.9 percent from US$1.30 billion in the prior-year period. “The increase in net revenues was the result of increases of US$274.7 million from Wynn Palace and US$120.2 million from Wynn Macau, partially offset by a decrease of US$6.2 million from our Las Vegas operations,” said Wynn Resorts.
Commenting on the quarterly results, banking group Morgan Stanley said in a Monday note: “Wynn Palace’s total market share for fourth-quarter 2017 was 9.0 percent and for mass market was 6.3 percent. Wynn [Macau property] mass revenue rose 20 percent quarter-on-quarter (higher than market growth of 11 percent).”
Brokerage Sanford C. Bernstein Ltd said in its note on the quarter: “Wynn Palace should continue to show solid ramp up over the next several quarters while Wynn peninsula remains the top-performing peninsula property and grows share at that property.”
JP Morgan Securities Ltd described the quarter as “truly remarkable”.
Net revenues from the Wynn Macau property in the traditional downtown casino district were US$618.6 million for the fourth quarter of 2017, up 24.1 percent from the same period of 2016 . Adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) from Wynn Macau was US$186.0 million for the fourth quarter of 2017 , a 25.0 percent year-on-year increase.
Casino revenues from the Wynn Macau venue were US$582.9 million for the fourth quarter of 2017, a 25.3 percent increase. Table games turnover in VIP operations was US$15.62 billion, a 44.7 percent increase year-on-year. VIP table games win as a percentage of turnover – calculated before commissions – was 2.89 percent.
Wynn Macau property mass table drop was US$1.25 billion, a 14.1 percent increase from US$1.10 billion for the fourth quarter of 2016 . Table games win in mass-market operations was US$230.1 million, an 18.6 percent increase from US$193.9 million for the fourth quarter of 2016 . Table games win percentage in mass market operations was 18.4 percent , above the 17.7 percent experienced for the fourth quarter of 2016 . Slot machine handle was US$937.6 million, a 16.8 percent increase from US$802.6 million for the fourth quarter of 2016, while slot machine win increased 25.3 percent to US$40.8 million .
Non-casino revenues before promotional allowances from Wynn Macau were US$73.9 million for the fourth quarter of 2017, a 14.5 percent increase from the US$64.6 million for the same period of 2016.
Fourth-quarter net revenues from Wynn Palace were US$693.4 million, a 65.6 percent increase year-on-year. Adjusted property EBITDA from Wynn Palace was US$190.1 million for the fourth quarter of 2017, a 145.3 percent increase from the prior-year period.
Casino revenues from Wynn Palace were US$648.6 million for the fourth quarter of 2017, up 73.8 percent year-on-year. Table games turnover in VIP operations was US$16.23 billion, a 57.1 percent increase from US$10.33 billion for the fourth quarter of 2016. VIP table games win as a percentage of turnover – calculated before commissions – was 3.02 percent.
Wynn Macau Ltd president Ian Coughlan said on the conference call: “The market clearly lifted in VIP and significantly in mass. Wynn Palace was perfectly prime to take advantage of that. Both our properties are designed for premium mass and VIP in addition to other market segments. And we were ready and waiting when the market lifted. We took a bigger share than everybody else.”
Table drop in mass-market operations was US$1.12 billion, a 55.1 percent increase year-on-year. Table games win in mass-market operations was US$264.5 million, up 65.7 percent. Table games win percentage in mass market operations was 23.5 percent , above the 22.0 percent experienced for the fourth quarter of 2016. Slot machine handle was US$920.6 million, a 72.3 percent rise, while slot machine win increased 96.2 percent to US$55.0 million .
Non-casino revenues before promotional allowances from Wynn Palace were US$90.8 million for the fourth quarter of 2017, a 5.5 percent increase year-on-year.
On Monday, Mr Wynn said the company would build a new hotel on land it recently acquired on the northern end of the Las Vegas Strip in the Nevada, U.S. gambling hub. The new hotel, Wynn West, will be a 2,000 to 3,000-room property on the site Wynn Resorts purchased in December from Australian casino operator Crown Resorts Ltd.
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”The [Macau] month-to-date run-rate represents an approximately 45-percent recovery versus pre-Covid-19 levels for headline gross gaming revenue”
DS Kim and Mufan Shi
Analysts at brokerage JP Morgan Securities