Wynn Macau Rides Macau’s New Visa Restrictions

Written on August 9, 2007 by admin

Yesterday, Wynn reported stellar second-quarter results well beyond anyone’s expectations, posting adjusted earnings of $0.92 per share, compared with the $0.53-per-share analyst estimate. On the announcement, Wynn shares traded up 10% in after-hours trading to a new high of $118.40.

Vegas, baby
The biggest surprise came from Wynn Las Vegas, which managed a whopping 57.6% jump in EBITDA to $115.3 million, largely because of a 40.4% gain in casino revenues to $159.4 million. The company also attributed $7 million of the gain to a higher-than-expected table-game hold percentage. The hotel business wasn’t too shabby, either, posting a 7.6% gain in revenue to $74.4 million, with revenue per available room rising 7.4% to $301.

Much like Las Vegas Sands, Wynn saw little apparent impact from new visa restrictions in Macau during the second quarter. Wynn Macau, which opened last September, reported EBITDA of $92.7 million on $352.5 million in revenue. The EBITDA figure was helped by $8 million-$9 million from a higher-than-expected hold, and was up 17% from the first quarter and up 58% from the fourth quarter.

Full speed ahead in Asia
Most interestingly, Wynn is now going ahead with its full Wynn Macau expansion. In the face of uncertainty in light of the newly imposed visa restrictions and new competition, including Melco-PBL’s recently opened Crown Macau, Las Vegas Sands’ Venetian Macao (Aug. 28 opening) and MGM Grand Macau (opening in late 2007), Wynn had announced in June that it would open only a portion of its planned expansion project in September.

The company still plans to open only 20,000 square feet of additional gaming space in September, which will include seven VIP gaming tables, 25 mass market tables, 220 slot machines, and a new restaurant. But the company expects to have the full expansion project done by January in time for the Chinese New Year, at which point the property will feature 380 gaming tables and 1,200 slot machines.

The current facility includes 248 gaming tables and 433 slot machines over 110,000 square feet of gaming space.