Macau-based casino operator Wynn Macau Ltd “could see meaningful mass market share gain” in 2017, says a new report from investment bank Morgan Stanley.
“We believe consensus… expects 90 basis points rise in Wynn Macau Ltd mass market share in 2017 compared to fourth quarter 2016 (10.4 percent), while U.S. analysts may be expecting an even lower increase,” analysts Praveen Choudhary, Alex Poon and Thomas Allen wrote in a note published on Monday.
They added: “Based on our… analysis of a Google search of each property, we conclude that Wynn Macau Ltd could see meaningful mass market share gain. We must admit that on the surface this analysis seems less reliable since more than 80 percent of Chinese consumers use Baidu [a Chinese online search engine] (and not Google), but we have seen strong correlation between property’s mass market share and the search market share for Sands China Ltd, Galaxy Group Entertainment Ltd and Melco Crown Entertainment Ltd historically.”
The Morgan Stanley team stated it expected mass table gaming revenue growth at casino resort Wynn Palace to go up 14 percent year-on-year in calendar year 2017.
In August last year Wynn Macau Ltd opened the US$4.4-billion Wynn Palace gaming resort (pictured) in the city’s Cotai district in a challenging market affected by factors including China’s ongoing anti-corruption drive. That is said by analysts to have moderated some of the demand by Chinese consumers for high-stakes gaming in Macau – a segment in which the Wynn Macau Ltd group has specialised.
In mass-market operations, table drop at Wynn Palace was US$725.0 million for the three months ended December 31, table games win was US$159.6 million and table games win percentage was 22.0 percent. Slot machine handle was US$534.4 million and slot machine win was US$28.1 million for the fourth quarter of 2016, according to Wynn Macau Ltd parent Wynn Resorts Ltd.
Morgan Stanley’s Monday note stated that Wynn Macau Ltd was actively trying to build its mass market share following the opening of Wynn Palace. That was despite accessibility challenges caused by constructions works for Macau’s light rail transit system and for the neighbouring MGM Cotai casino resort, being developed by MGM China Holdings Ltd.
“Since the opening of Wynn Palace, management has made a number of strategic and operational changes to drive increased awareness, traffic and mass gaming volumes,” the investment bank said. “Management has reconfigured its casino floor at the Palace, including adding two themed slot sections and a new poker area, increasing the property’s mass appeal. Management has also reduced the overall casino square footage, which it believes is helping drive higher energy on the floor.”
The Morgan Stanley analysts mentioned as a positive factor Wynn Palace being included in the Cotai Connection route, a shuttle bus service serving several casinos from different operators in the Cotai district. The investment bank also highlighted “increasing marketing efforts” by Wynn Macau Ltd to raise player awareness of Wynn Palace and the addition of more mass-market options to its dining offering.
“Wynn Macau Ltd has already requested approval from the Macau government 10 weeks post-opening to add two casual dining restaurants next to the casino, and is expanding the Red 8 restaurant in the mass gaming area to accommodate high customer demand,” the Morgan Stanley analysts wrote.
Wynn Macau Ltd president Ian Coughlan confirmed in January during a conference call with investment analysts that the firm had been introducing changes to Wynn Palace to improve performance. “We are very focused on ramping up premium mass, which me believe is a real edge-giver, given our service and our facility,” he said at the time. Mr Coughlan also said management was increasing the causal dining offering at Wynn Palace due to demand.
Morgan Stanley’s note stated that Wynn Macau Ltd also had implemented some changes at its Macau Peninsula property. The casino operator reportedly moved 30 mass-market tables from Wynn Palace to Wynn Macau as these were under-utilised at the Cotai property, according to the investment bank.
The note additionally commented on recent changes in Wynn Macau Ltd’s executive team. It said “recent hires show a shift to a more mass-focused company.”
The casino operator announced last month Craig Billings as its new chief financial officer following the departure of Stephen Cootey. Mr Billings served in various roles at Australian slot machine maker Aristocrat Leisure Ltd, including as chief digital officer and managing director of strategy and business development.
Wynn Macau Ltd had confirmed to GGRAsia last month that Ciaran Carruthers – previously a senior executive with Sands China – had been appointed chief operating officer of the Wynn Macau property. Mr Carruthers had previously served as senior vice president for property operations at Sands China. He had also been a senior executive with Macau casino company Galaxy Entertainment.
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"VIP growth [in Macau] is roaring back on the heels of last year’s economic stimulus – but we think this could stall once the effect of the stimulus and the Chinese housing bubble wears off – as it did in 2013-14"
Cameron McKnight and Robert Shore
Analysts at Wells Fargo Securities