The board of Macau-based casino operator Wynn Macau Ltd has recommended a final dividend of HKD0.42 (US$0.054) per share in respect of calendar year 2016, with a proposed payment date of June 20.
The dividend – subject to approval at the company’s forthcoming annual general meeting – will be paid to shareholders whose names appear on the register on June 9, the Hong Kong-listed company said in a filing on Thursday.
Commenting on the dividend payment announcement, JP Morgan Securities (Asia Pacific) Ltd said: “This implies 150 percent payout and 2.6 percent yield, versus 130 percent payout last year (based on special dividend per share).”
Analysts DS Kim and Sean Zhuang added: “On the negative side, the amount of dividend is below what we and buy-side investors had expected (HKD0.60, flat year-on-year).”
The two analysts however noted that the return of a regular dividend payment at Wynn Macau Ltd was “a positive surprise (versus the expectations of special)”. According to Mr Kim and Mr Zhuang, it suggested management was “now more comfortable returning capital on a recurring basis, with its vastly improved free cash flow profile”.
They added that the move could also hint that Wynn Macau Ltd might start paying an interim dividend from full year 2017, “resuming semi-annual payments like it used to do until full year 2014”.
The JP Morgan analysts further stated the full year 2016 payout ratio of 150 percent looked “very high for a ‘regular’ dividend”; according to Mr Kim and Mr Zhuang, it was the highest payout ratio in Wynn Macau Ltd’s history.
The dividend payment announcement was included in Wynn Macau Ltd’s annual results filing. The main information on the firm’s 2016 performance already had been disclosed in February by parent Wynn Resorts Ltd. Wynn Macau Ltd reported net profit of HKD1.4 billion in 2016, down by 40.4 percent in year-on-year terms.
In the annual results filing, Wynn Macau Ltd stated that the company invested a total of HKD34.4 billion in the development of Wynn Palace casino resort (pictured), in Macau’s Cotai district. The property opened on August 22.
The firm added it had reached a final agreement “to resolve certain differences in relation to the construction of Wynn Palace” with general contractor Leighton Contractors (Asia) Ltd, in October 2016. “Among other things, the company agreed to an increase of the guaranteed maximum price under the… contract to HKD23.1 billion and Leighton agreed to complete all outstanding work necessary to achieve final completion and use the additional payments due from the company to discharge its liabilities to its sub-contractors, suppliers and vendors.”
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Summit Ascent, lead developer of Tigre de Cristal