GGRAsia – Wynn Macau Ltd EBITDA up 1Q, says premium mass bet paid

Wynn Macau Ltd EBITDA up 1Q, says premium mass bet paid

May 11, 2021 Newsdesk Latest News, Macau, Top of the deck

Wynn Macau Ltd saw its adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) grow in the first three months of 2021 from the preceding quarter, with the parent company saying its bet on focusing on premium-mass gambling customers paid off.

Nonetheless, the quarterly loss at the Macau unit widened year-on-year, to US$161.2 million, from nearly US$154.2 million in the first three months of 2020, the Macau unit said in a Tuesday filing to the Hong Kong Stock Exchange.

United States-based parent company Wynn Resorts Ltd said on Monday in a U.S. filing, that the Macau casino firm’s adjusted property EBITDA for the Macau market hit US$43.9 million in the first quarter, up by 11.4 percent from the fourth quarter of 2020. The first-quarter figure was 49.5-percent higher than a year earlier.

Wynn Macau Ltd posted positive adjusted property EBITDA for a second consecutive quarter, following two quarters of negative results.

Brokerage Sanford C. Bernstein Ltd said in a Tuesday note: “The future for Wynn Macau [Ltd] remains in premium mass.”

Analysts Vitaly Umansky, Kelsey Zhu and Louis Li added: “The company has made changes to the properties to refocus more on premium mass – i.e., changes to some food offerings, changes to high-end suite configurations into entertainment spaces for small events, reallocating hotel rooms from junkets to premium mass, etc.”

Hong Kong-based analyst Andrew Lee, of Jefferies Group LLC, said Wynn Macau Ltd’s first-quarter results had been “broadly in line with expectations”.

He added that parent’s management had given “positive” comments about events after the reporting period: “strong” business in the five-day break encompassing the Labour Day holiday on May 1, with what Mr Lee termed “EBITDA at post-pandemic highs”, as well as “new mainland China visitors,” at the group’s Macau properties, and “optimism for summer” business.

Combined first-quarter operating revenues from casino business at the firm’s Wynn Macau venue on Macau peninsula, and Wynn Palace venue (pictured) on Cotai, fell by 18.3 percent year-on-year, to US$324.8 million. But the result was an increase of 11.8 percent from US$290.7 million in the fourth quarter of 2020.

In commentary included in Wynn Resorts’ results announcement, chief executive Matt Maddox said the firm’s first-quarter results showed that “consumers began to once again travel to their favourite leisure and gaming destinations”.

The Macau unit experienced “continued gradual improvement in visitation trends driving particular strength in premium-mass casino and luxury retail,” he added.

Macau floors rejigged

Last February Mr Maddox had said the group had “spent a lot of time” reconfiguring its properties in Macau in the second half of 2020, in order to cater for a growing premium-mass segment.

“It’s crystal clear that the growth drivers for Macau are really the sweet spot for our company, and that’s the premium segment, premium mass in particular,” he said.

Wynn Macau and Wynn Palace posted in aggregate, mass-market table drop of just under US$1.2 billion in the first quarter, up by 13.8 percent year-on-year. It was however slightly down from the US$1.29 billion in last quarter of 2020.

The trend was not as rosy for Wynn Macau Ltd in the VIP segment, where combined turnover hit US$4.0 billion for the January to March period, down by 12.5 percent from the previous quarter. It was also a far cry from the nearly US$7.8 billion posted a year earlier.

Nonetheless, the company won just under US$155.1 million from its VIP table games, up by 40.6 percent sequentially.

Better-than-average luck was the biggest reason, said the group, with Wynn Palace in particular keeping 4.38 percent of all VIP turnover, above the property’s expected range of 2.7 percent to 3 percent. Wynn Macau VIP table games win was 3.25 percent of the turnover.

But Wynn Resorts noted in its results announcement in relation to Macau operations: “Certain Covid-19 specific protective measures, such as limiting the number of seats per table game, increasing the spacing between active slot machines and visitor entry checks and requirements involving temperature checkpoints, mask wearing, health declarations and proof of negative COVID-19 test results remain in effect at the present time.”

Wynn Resorts was also “currently unable to determine (…) when the company will be able to resume certain offerings” at its Macau operations.

Wynn Macau Ltd had outstanding long-term debt of just under US$6.00 billion at the end of March, down from US$6.38 billion three months earlier. The firm had US$1.80 billion in cash or equivalents – down from US$2.43 billion at the end of 2020 – as well as available borrowing capacity of US$293 million, down from US$343.5 million.

The group as a whole – which also runs Wynn Las Vegas in Nevada and Encore Boston Harbor in Massachusetts in the U.S. – recorded a quarterly net loss of US$281 million, up from the loss of US$178.6 million for the October to December period.