GGRAsia – Wynn Macau Ltd says lower mass hold, share hit 2Q results

Wynn Macau Ltd says lower mass hold, share hit 2Q results

Aug 07, 2024 Newsdesk Latest News, Macau, Top of the deck

Macau casino business Wynn Macau Ltd reported operating revenues of US$885.3 million in the second quarter, down 11.3 percent from the preceding quarter. Such revenue rose by 15.0 percent from US$700.0 million in the prior-year quarter, according to a Tuesday filing from the parent, U.S.-based Wynn Resorts Ltd.

The group operates the Wynn Palace resort (pictured) on Cotai, and also runs the Wynn Macau resort on the city’s peninsula.

Wynn Macau Ltd recorded second quarter adjusted earnings before interest, taxation, depreciation, amortisation, and rent (EBITDAR) of just under US$280.4 million, 17.4-percent lower sequentially, but up 13.9 percent from a year earlier.

“We generated US$280 million of EBITDAR in the second quarter on slightly lower market share than we have experienced over the previous several quarters and slightly lower mass hold quarter-over-quarter,” said Craig Billings, group chief executive of Wynn Resorts, on a Tuesday conference call with investment analysts.

“There has been a lot of chatter in the [Macau] market about the elevated promotional environment in Macau while concessionaires jockey for market share,” stated Mr Billings.

He added: “Of course, while we are active every day in the hand-to-hand combat for market share, you can’t take market share to the bank, and thus, we have continued to remain disciplined in our operating expenses and player reinvestment levels highlighted by our strong EBITDAR margin in the quarter, which was 250 basis points above second-quarter 2019.”

The CEO said that “dynamic” in the Macau market had been observed previously, but affirmed that the company remained confident in its ability to “compete effectively in the long-term”.

“We were encouraged that our GGR [gross gaming revenue] market share moved back to our expected range in July, supported by strong mass table drop and 99 percent hotel occupancy during the month,” said Mr Billings.

JP Morgan Securities (Asia Pacific) Ltd said in a Wednesday memo that Wynn Macau Ltd’s second-quarter EBITDAR result “missed” investment analysts’ consensus, “with the downside from its mass and non-gaming revenues, despite its disciplined operational/promotional spends”.

Wynn Macau Ltd “was the biggest share donor in the second quarter with its GGR market share down 150 basis points to 12.7 percent, versus 14.2 percent in the first quarter or 13.5 percent in the second half of 2023,” wrote analysts DS Kim, Mufan Shi, and Selina Li.

The firm’s “headline GGR fell 12 percent quarter-on-quarter, versus the industry’s minus 2 percent, as it lost shares in both VIP and mass, though the latter of which was partly dragged by relatively poor holds – 20.7 percent in the second quarter, versus 22 percent in the first quarter,” they added.

Sluggish non-gaming

Julie Cameron-Doe, Wynn Resorts’ chief financial officer, said on Tuesday’s call that the group estimated that lower hold in the second quarter in Macau “negatively impacted EBITDA, in the combined properties, by around US$3 million”.

According to Brian Gullbrants, Wynn Resorts’ chief operating officer, the group’s player reinvestment in the Macau market “in any given quarter could move up or down 50 basis points, 75 basis points, … based on what we’re trying to achieve”.

On a property basis, operating revenues from Wynn Palace fell by 6.6 percent on a sequential basis, to US$548.0 million. It compared with operating revenues of US$468.4 million a year earlier.

The property’s adjusted EBITDAR amounted to US$184.5 million, down 8.8 percent quarter-on-quarter, but up 17.8 percent from the prior-year period.

The Wynn Macau resort recorded operating revenues of US$337.3 million, down 2.6 percent sequentially, but a 11.8-percent increase from a year ago.

The complex produced adjusted EBITDAR of US$95.9 million, a 30.1-percent decline from the preceding quarter, but up 7.0 percent from a year earlier.

According to JP Morgan, Wynn Macau Ltd’s non-gaming figures in the three months to June 30 were “bad”.

“Wynn’s non-gaming revenues fell 11 percent quarter-on-quarter to its lowest level since re-opening [in early 2023], falling 4-percent below pre-Covid levels,” stated the analysts. “The weakness was seen across the board within non-gaming, but retail income saw the biggest hit, minus 16 percent quarter-on-quarter to 20 to 25 percent below pre-Covid levels.”

They added: “We can’t say this was a surprise given a slew of heavy misses and guidance cut at European luxury names recently, but it’s certainly concerning and something that we’d closely monitor into second half.”

On Tuesday, Wynn Resorts reported net income of US$111.9 million for the second quarter of 2024, on operating revenues that rose by 8.1 percent year-on-year, to US$1.73 billion. Such revenue was down 7.0 percent sequentially.

The parent declared a cash dividend of US$0.25 per share, payable on August 30.