Wynn Macau Ltd. (1128), the Hong Kong- listed unit of billionaire Steve Wynn’s Las Vegas company, reported a 7.1 percent drop in second-quarter revenue as high- stake gamblers curbed spending amid a slower Chinese economy.
Revenue dropped to $907.6 million from $976.5 million at the casino operator, according to filing today. The company’s parent Wynn Resorts Ltd. (WYNN) reported results that missed analysts’ estimates because of lower winnings in Macau and Nevada.
The revenue decline reflects slowing growth in the world’s largest gambling hub and is a reversal from Wynn Macau’s first quarter when tourists from China’s mainland boosted sales. High- rollers, otherwise known as VIPs, who contribute more than 70 percent of the city’s gambling revenue, are not spending as much as they did in Macau’s 35 casinos, according to Grant Govertsen, an analyst at Union Gaming Group LLC.
“With a global economic recession and leadership changes in China, VIPs are cutting back,” Govertsen said before the earnings announcement.
Analysts at JPMorgan Chase & Co. cut their share price forecast to HK$25.80 from HK$28.50 to factor in lower gaming revenue growth growth in Macau and declining market share.
Net income for the three months ended in June was $220.6 million, compared with $120.3 million a year earlier, Wynn Macau said in the filing to the Hong Kong stock exchange today. The company’s profit was boosted by a $21 million writeback on a bad loan provision, Simon Cheung, an analyst at Goldman Sachs Group Inc. in Hong Kong, said in a note to clients.
Profit for the second quarter of 2011 reflected a $107 million charge for a charitable contribution made to the University of Macau Development Foundation, according to the company’s year-earlier earnings statement. That donation is part of a legal dispute between Wynn and Japanese billionaire Kazuo Okada.
Growth in gambling revenue in the world’s largest gambling hub has slowed, rising 7.3 percent in May, the weakest pace since July 2009. Even though Macau’s gambling revenue increased 12.2 percent in June to 23.3 billion patacas ($2.9 billion), it still lagged the 15.3 percent median estimate of four analysts surveyed by Bloomberg News.
Table games turnover in the VIP segment was $30.3 billion for the second quarter, a 7.2 percent decline from $32.7 billion a year earlier, the Macau company said. Excluding items, Las Vegas-based Wynn Resorts’ profit totaled $1.38 a share, missing the $1.50 a share average of 23 analysts’ estimates compiled by Bloomberg.
Wynn Macau said on May 2 that it won a land grant from Macau’s government to build its second resort in the former Portuguese colony. The company will join Sands China Ltd. (1928), Galaxy Entertainment Group Ltd. (27), and Melco Crown Entertainment Ltd. (MPEL) in expanding into the city’s increasingly popular Cotai Strip.
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