Wynn Macau Profit Drops as Cotai Rivals Win Customers
Stock Chart for Wynn Resorts Ltd (WYNN)
Wynn Macau Ltd.’s profit fell 18 percent in the fourth quarter as competitors on the Chinese city’s Cotai strip expanded to draw customers from the unit of billionaire Steve Wynn’s Las Vegas-based casino operator.
Net income dropped to $196.8 million from $239.9 million a year earlier, Wynn Macau said in a statement to the Hong Kong stock exchange today. Revenue fell 10 percent to $838.8 million.
The casino operator is expanding in Macau, the world’s largest gambling hub, where it faces intensifying competition as Sands China Ltd. (1928) and Galaxy Entertainment Group Ltd. (27) have boosted profit by building new resorts on the Cotai strip. Revenue for the industry rose 7.3 percent in January to 26.9 billion patacas ($3.4 billion), according to statistics released by the city today, missing the 27.8 billion pataca estimate from five analysts surveyed by Bloomberg News.
“Wynn Macau is lagging its peers, primarily due to its limited exposure to the mass market,” said Lantis Li, a Hong Kong-based analyst at Capital Securities Corp. (6005) “Wynn Macau has only one property in the peninsula and it has been relying on the VIP business.”
Wynn Macau lost 2.3 percent to HK$21.25 in Hong Kong trading today.
Sands China, controlled by billionaire Sheldon Adelson, posted a 52 percent jump in fourth-quarter profit earlier this week as it lured gamblers.
Wynn spent $57.1 million in the fourth quarter on its first Cotai resort, which it expects to cost between $3.5 billion and $4 billion, according to a statement from parent Wynn Resorts Ltd. (WYNN) yesterday.
Wynn Macau’s adjusted property earnings before interest, taxes, depreciation and amortization declined 9.5 percent to $283.2 million, according to the statement. That compares with a median estimate of $287 million from a survey of five analysts by Bloomberg News.
Wynn Resorts cited the decline in its Macau business yesterday, when it reported fourth-quarter profit that fell short of analysts’ estimates.
“Murder tough,” Steve Wynn, who is chairman of both companies, said yesterday, referring to increasing rivalry among casinos in China’s only legal gambling zone. “Those guys have blood in their eye.”
Full-year casino industry revenue climbed 14 percent to a record 304 billion patacas in 2012.
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