Wynn Macau Ltd has one of the most efficient gambling operations in the Macau market, with its VIP tables registering win-per-unit-per day that is 30 percent higher than that for the average VIP table in the city. So said a Wednesday note from brokerage Sanford C. Bernstein Ltd, putting an “outperform” rating on the firm’s stock.
Wynn Macau Ltd – the local operating unit of United States-based Wynn Resorts Ltd – runs two venues in the Special Administrative Region of China: Wynn Macau on the city’s peninsula, and Wynn Palace (pictured), which opened in August 2016 in Cotai, the new casino district located in a landfill zone between the formerly separate islands of Taipa and of Coloane.
Sanford Bernstein analysts Vitaly Umansky, Zhen Gong and Kelsey Zhu said in their memo, referring to the health of the mainland China economy, said to be a major factor in Macau gambling spend: “For Wynn Macau [Ltd], we believe the market had overreacted to the China macro slowdown risks and the decelerating GGR [gross gaming revenue] environment.”
They added, referring second to a mass-market gambling segment where the players wager high stakes but in cash not credit: “Even though Wynn [Macau Ltd] has higher exposure to VIP than other operators, the market is underestimating Wynn [Macau Ltd]‘s strong position in premium mass; its superior operation and marketing capability and strong brand; [and] the continued ramp up growth opportunities at Wynn Palace.”
The brokerage said Wynn Macau Ltd had “the highest table yields in the Macau market helping drive strong operating leverage”.
It said – without specifying a timeline – that in VIP, Wynn’s tables generated nearly US$43,200 in win-per-unit-per day, a 30 percent premium to the average VIP table in Macau. The institution said that in the mass segment, “table utilisation was strong as well” with the Macau operating unit generating nearly US$13,400 in win-per-unit-per day. Sanford Bernstein said that was a 47 percent premium to the average Macau mass table.
The Macau unit’s stock had closed at HKD20.65 (US$2.63) on Tuesday in Hong Kong, a gain of 2.48 percent on the day, according to Bloomberg data. The stock has produced a one-year return of 20.87 percent.
In a report earlier this month, Sanford Bernstein had said anti-corruption investigations in China had recently reached a volume not seen since the end of 2015. The brokerage had mentioned such activity could play a role – with other factors – in moderating demand for VIP gambling in the Macau market, which overwhelmingly caters for Chinese customers in its high-roller rooms.
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Vitaly Umansky, Louis Li and Shirley Yang
Analysts at brokerage Sanford C. Bernstein