Wynn Macau Earnings Beat Estimates as China Economy ReboundsVinicy Chan
Wynn Macau Ltd., the casino operator controlled by billionaire Steve Wynn, posted a 13 percent increase in third-quarter earnings as an improving Chinese economy boosted spending.
Adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, rose to $329.1 million from $292.2 million a year earlier, according to a statement by parent company Wynn Resorts Ltd. yesterday. That surpassed the $300.6 million average estimate of 10 analysts surveyed by Bloomberg. Net revenue climbed 9.6 percent to $997.6 million.
China’s economic growth accelerated for the first time in three quarters with gross domestic product rising 7.8 percent in the July-September period from a year earlier.
Wynn Macau will generate a compounded annual growth rate in Ebitda, or earnings before interest, taxes, depreciation and amortization, of 10 percent in the next three years, the smallest rate among all Macau casino operators, Philip Tulk, a Hong Kong-based analyst at Standard Chartered Bank, said in a research note dated Oct. 15.
The company is expected to reap only “modest benefits of refurbishments at the older hotel and a new VIP area, as it remains focused on slower-growth, lower-margin VIP gaming,” Tulk said, referring to the high-stake gaming sector. Bigger rivals including Sands China Ltd. and Galaxy Entertainment Group Ltd. have been expanding in the mass-market segment that provides faster growth and higher margins.
The shares fell 3 percent to HK$29.35 in Hong Kong today. Wynn Macau has risen 40 percent this year, outperforming the 0.2 percent gain in benchmark Hang Seng Index.
Wynn Macau this month raised $600 million by selling senior notes which will be due 2021. The company plans to use the net proceeds from the offering for work capital and general corporate purposes, it said in a statement.
The operator is constructing the $4 billion Wynn Palace casino resort on the Chinese city’s Cotai Strip, the Asian equivalent of the Las Vegas Strip. The resort will feature floral sculptures the size of “floats of the Rose Bowl Parade,” Wynn earlier said. It is scheduled to open in early 2016.
Gambling revenue in Macau, the only place in China where casinos are legal, gained 17 percent to 260.6 billion patacas ($33 billion) in the first nine months of this year, after raking in $38 billion in 2012.
Wynn Resorts reported third-quarter profit rose to $1.84 a share, excluding items, above the $1.67 average estimate of 22 analysts compiled by Bloomberg.