Growth for Wynn Macau Ltd’s properties “has started to decelerate” as post-pandemic business recovery in Macau “has matured,” stated Fitch Ratings Inc. The gaming group as a whole, controlled by U.S.-based Wynn Resorts Ltd, “has done a solid job of reducing its debt load,” wrote analysts David Bussey and Kyle Morgan.
In the Macau market, the group operates Wynn Macau on the city’s peninsula, and Wynn Palace (pictured) in the Cotai casino district.
Wynn Macau Ltd reported operating revenues of US$871.7 million for the three months to September 30, up 6.3 percent year-on-year.
The overall Macau operation’s adjusted earnings before interest, taxation, depreciation, amortisation and rent (EBITDAR) were up 3.1 percent year-on-year, at nearly US$262.9 million. Such EBITDAR was down 6.2 percent sequentially.
The Fitch analysts stated in a Wednesday report: “However, both metrics remain below pre-pandemic levels. While trends in Macau remain healthy – post-third quarter 2024 – the company continues to contend for market share in a highly-competitive environment.”
According to the ratings agency, Wynn Resorts ended the third quarter with net debt of US$9.4 billion, including US$2.4 billion of cash and US$11.9 billion of total debt. Cash on hand included US$1.34 billion held by Wynn Macau Ltd, it added.
Singapore-based Lucror Analytics stated in a Wednesday memo that at end-September, Wynn Macau Ltd’s total debt “declined 5 percent” from the 2023 level “to US$6.4 billion”.
“Net debt decreased 5 percent – by US$252 million – from 2023 and was down 2 percent quarter-on-quarter at US$4.5 billion,” stated credit analyst Leonard Law, in a report carried on the Smartkarma platform.
The Lucror analyst noted that Wynn Macau Ltd’s ratio of net debt to adjusted property EBITDA in the last 12 months “improved to 3.8 times” from “5.0 times” in 2023, but “remained weaker than the pre-pandemic level of 2.3 times”.
At the end of September, Wynn Macau Ltd said lenders had agreed to extend by three years – to September 16, 2028 – the maturity date of some outstanding loans under a revolving facility of about US$1.5 billion.
Mr Law said: “The company has drawn down US$1.15 billion as of end-September, leaving US$354 million available.”
He observed: “Overall, Wynn Macau’s [Ltd’s] third-quarter 2024 results were in line with expectations, albeit its market share and earnings continued to underperform peers relative to the pre-pandemic level.”
“Positively, Wynn Macau [Ltd] continued to generate positive free-cash-flow and reduce net debt slowly, despite resuming dividend payments,” stated Mr Law.
The analyst added: “Going forward, we expect the company to continue generating small positive free-cash-flow and deleveraging gradually, provided it does not significantly raise dividend payments.”
