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Wynn Macau Shares Gain After Parent Pays Special Dividend

Wynn Macau Ltd. rose to a five-month high in Hong Kong trading on optimism that billionaire Steve Wynn’s Macau casino operator could pay a special dividend after its Las Vegas parent boosted its payout to investors.

Wynn Macau, a unit of Wynn Resorts Ltd., closed 2.5 percent higher at HK$22.2, the highest level since May 9. The city’s Hang Seng Index rose 0.2 percent.

Parent Wynn Resorts boosted its special cash dividend to $7.50 a share from $5 a year earlier after reporting better-than-expected earnings in the third quarter. Higher spending by Chinese gamblers has helped the Asian unit to more than double its cash to HK$5.26 billion in the three years to 2011, according to data compiled by Bloomberg.

“The company’s parent declared a higher-than-expected special dividend, raising the guidance for the future quarterly dividend payment,” said Victor Yip, a Hong Kong-based analyst for UOB-Kay Hian. “That brings expectation to the market that Wynn Macau could also raise its future dividend payout.”

Wynn Resorts’s third-quarter profit excluding some items was $1.48 a share, beating the $1.34 average of 23 analysts’ estimates compiled by Bloomberg. Macau accounted for 72 percent of the company’s sales last year.

Wynn Macau may pay a special dividend of HK$1.2 to HK$1.4 a share this year, compared with HK$1.2 a year earlier, Karen Tang, an analyst at Deutsche Bank AG, estimated.

Net income at Wynn Macau fell 3 percent to $203.3 million a year earlier as high rollers spent less, the unit said in a statement to the Hong Kong stock exchange today. The company’s casino revenue dropped 4 percent to $857.3 million.

VIP Market

The revenue decline reflects slowing growth in the world’s largest gambling hub, where high rollers, or VIP bettors, from China’s mainland have cut back. Still, VIP table game wins for the company as a percentage of turnover was 3.08 percent, exceeding the company’s expected range and that recorded in the third quarter of 2011, Wynn Macau said.

“We still believe the period of most drastic earnings downgrade for Wynn is behind us,” Goldman Sachs wrote in a note today, referring to the Hong Kong unit. Wynn Macau sees signs of stabilization in the VIP market and believes it is “far from fully penetrated,” Goldman said.

Across Macau casinos, revenue from the so-called mass market rose 27 percent, while demand from high-stakes gamblers contracted, Deutsche Bank AG estimated Oct. 22. Macau’s gaming revenue rose 12 percent last month, less than the estimates of some analysts.

Land Grant

Wynn Macau won a land grant from Macau’s government to build its second resort in the former Portuguese colony, the company said May 2. The casino operator will join Sands China Ltd., Galaxy Entertainment Group Ltd., and Melco Crown Entertainment Ltd. in expanding into the city’s increasingly popular Cotai Strip.

The company’s adjusted Macau property earnings before interest, tax, depreciation and amortization fell 1.3 percent to $292.2 million compared with a year earlier, Wynn Resorts said. Galaxy Entertainment Group Ltd. today posted adjusted earnings before interest, taxes, depreciation and amortization, or Ebitda, of HK$2.6 billion, an increase of 46 percent from a year earlier.

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