Wynn Macau Earnings Beat Estimates on Margin Improvement

Wynn Macau Ltd. profit rose 32 percent in the fourth quarter as billionaire Steve Wynn’s casino operator raised margins by attracting more premium mass-market gamblers.

Adjusted property earnings before interest, taxes, depreciation and amortization, or Ebitda, rose to $374.2 million from $283.2 million a year earlier, according to a statement by parent company Wynn Resorts Ltd. dated Jan. 30. That surpassed the $343.3 million average of 10 analyst estimates compiled by Bloomberg. Net revenue jumped 25 percent to $1.12 billion.

Wynn Macau “gained mass market share as it converted 12 to 13 VIP gaming tables to mass in mid-October,” Karen Tang, a Hong Kong-based analyst at Deutsche Bank AG, wrote in a research note published Jan. 27.

Bigger rivals including Sands China Ltd. and Galaxy Entertainment Group Ltd. have been adding shops, restaurants and entertainment shows to lure the mass and premium mass market gamblers who bet in cash and provide fatter margins because they don’t rely on junket operators to bring them to Macau.

Wynn’s premium-mass segment could grow further in 2014 after the company renovates the Wynn Hotel tower, Praveen Choudhary, a Hong Kong-based Morgan Stanley analyst, wrote in a research note dated Jan. 7.

Junket Operators

Casino revenue in Macau, the only place in China where casinos are legal, jumped 19 percent to $45 billion last year, with about two-thirds of the revenue coming from high-stake bettors from mainland China whose gambling trips are arranged by junket operators.

Casino operators have to pay commission, about 1.25 percent of the total bets made by VIPs, to the junket operators who are in charge of recruiting high rollers, giving them credit to gamble, collecting debts and arranging transportation to accommodation.

Wynn Macau rose 1.4 percent to close at HK$33.15 in Hong Kong yesterday, compared with the 0.5 percent decline in the city’s benchmark Hang Seng Index. The city’s stock market will be closed today and on Feb. 3 for the Lunar New Year break.

The company is building 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.

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