Wynn Macau Ltd. (WYNMF)

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In The News: WYNMF

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Macau Operations

In the fourth quarter of 2015, net revenues were $555.7 million, a 27.0% decrease from the $761.2 million generated in the fourth quarter of 2014. Adjusted property EBITDA in the fourth quarter of 2015 was $160.1 million, down 33.6% from $241.2 million in the fourth quarter of 2014.

Table games turnover in the VIP segment was $13.0 billion for the fourth quarter of 2015, a 36.9% decrease from $20.7 billion in the fourth quarter of 2014. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.60%, below the expected range of 2.7% to 3.0% and below the 2.80% experienced in the fourth quarter of 2014. The average number of VIP tables decreased to 192 units in the fourth quarter of 2015 from 244 units in the prior year's fourth quarter.

Commencing in the second quarter of 2015, the Company included the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage in the calculation of table drop in accordance with standard Macau industry practice. Table drop in the mass market segment was $1,185.5 million in the fourth quarter of 2015, down 10.9% from the 2014 fourth quarter. Table games win in the mass market segment decreased by 8.2% to $228.6 million in the fourth quarter of 2015. The mass market win percentage of 19.3% in the fourth quarter of 2015 increased from the 18.7% experienced in the fourth quarter of 2014.

Slot machine handle for the fourth quarter of 2015 declined 4.7% from the 2014 period to $1,069.3 million, and slot win decreased by 9.8% to $50.4 million.

For the fourth quarter of 2015, total non-casino revenues, before promotional allowances, decreased 21.2% during the quarter to $75.6 million. We achieved an average daily rate ("ADR") of $323, down 2.7% compared to the $332 in the 2014 fourth quarter. Occupancy at Wynn Macau was 96.3%, down from 98.6% in the prior-year period. Revenue per available room ("REVPAR") decreased 5.2% to $311 in the 2015 quarter from $328 in last year’s fourth quarter.

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Macau Operations

In the second quarter of 2015, net revenues were $617.0 million, a 35.8% decrease from the $960.6 million generated in the second quarter of 2014. Adjusted property EBITDA in the second quarter of 2015 was $173.4 million, down 43.5% from $307.0 million in the second quarter of 2014, due primarily to weakness in the gaming segment.

Table games turnover in the VIP segment was $15.5 billion for the second quarter of 2015, a 41.1% decrease from $26.4 billion in the second quarter of 2014. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.92%, within the expected range of 2.7% to 3.0% and flat compared to the 2.93% experienced in the second quarter of 2014. The average number of VIP tables decreased to 247 units in the second quarter of 2015 from 263 units in the prior year's second quarter.

The Company has determined that it will now include the amount of cash that is deposited in a gaming table's drop box plus cash chips purchased at the casino cage in the calculation of table drop in accordance with standard Macau industry practice. Table drop in the mass market segment was $1.2 billion in the second quarter of 2015, down 16.5% from the 2014 second quarter. Table games win in the mass market segment decreased by 32.9% to $208.6 million in the second quarter of 2015. The mass market win percentage of 17.5% in the second quarter of 2015 was below the 21.8% in the second quarter of 2014 and below the 20.5% over the trailing twelve months ended June 30, 2015.

Slot machine handle for the second quarter of 2015 declined 29.5% from the 2014 period to $1,027.6 million, and slot win decreased by 22.5%.

For the second quarter of 2015, total non-casino revenues, before promotional allowances, decreased 22.3% during the quarter to $78.1 million. We achieved an average daily rate (ADR) of $321, down 3.9% compared to the $334 reported in the 2014 second quarter. Occupancy at Wynn Macau of 96.4% compares to 98.4% in the prior-year period. Revenue per available room (REVPAR) decreased 5.8% to $310 in the 2015 quarter from $329 in last year’s second quarter.

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Macau Operations

In the third quarter of 2014, net revenues were $942.3 million, a 5.6% decrease from the $997.6 million generated in the third quarter of 2013. Adjusted property EBITDA in the third quarter of 2014 was $325.5 million, down 1.1% from $329.1 million in the third quarter of 2013.

Table games results in Macau are segregated into two distinct reporting categories, the VIP segment and the mass market segment.

Table games turnover in the VIP segment was $25.1 billion for the third quarter of 2014, a 17.4% decrease from $30.3 billion in the third quarter of 2013. VIP table games win as a percentage of turnover (calculated before commissions) for the quarter was 2.78%, within the expected range of 2.7% to 3.0% and below the 3.04% experienced in the third quarter of 2013.

Table games win in the mass market segment increased by 36.4% to $327.2 million in the third quarter of 2014. Mass market table games win per unit per day increased by 38.0% to $17,759 from $12,872 in the third quarter of 2013. Drop in the mass market segment was $641.2 million in the third quarter of 2014, up 1.7% from the 2013 third quarter, while the segment’s win percentage of 51.0% compares to 38.0% in last year’s third quarter and sequentially to 45.6% in the second quarter of 2014. Customers purchase mass market gaming chips at either the gaming tables or the casino cage. Chips purchased at the casino cage are excluded from table games drop and will increase the expected win percentage. With the increased purchases at the casino cage, we believe the relevant indicator of volumes in the mass market segment should be actual table games win rather than win percentage.

Slot machine handle of $1.4 billion for the third quarter of 2014 was 23.2% above the prior-year quarter, and slot win increased 31.9% compared to the prior-year period. Win per unit per day was 97.1% higher at $1,358, compared to $689 in the third quarter of 2013, due in part to a reduction in the number of units on the casino floor.

For the third quarter of 2014, we achieved an average daily rate (ADR) of $327, 5.5% above the $310 reported in the 2013 third quarter. Occupancy at Wynn Macau of 98.5% compares to 95.8% in the prior-year period, and revenue per available room (REVPAR) rose 8.4% to $322 in the 2014 quarter from $297 in last year’s third quarter. Non-casino revenues, before promotional allowances, increased 1.4% during the quarter to $99.1 million.

Wynn Palace Project in Macau

The Company is currently constructing Wynn Palace, a fully integrated resort containing a 1,700-room hotel, performance lake, meeting space, casino, spa, retail offerings, and food and beverage outlets in the Cotai area of Macau. In July 2013, we signed a $2.6 billion guaranteed maximum price (GMP) contract for the project’s construction. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is approximately $4.1 billion. We expect to open our resort on Cotai in the first half of 2016.

During the third quarter of 2014, we invested approximately $301.1 million in our Cotai project, taking the total investment to date to $1.4 billion.

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Wynn Macau Earnings Beat Estimates on Margin Improvement
By Vinicy Chan Jan 30, 2014 1:21 PM PT 0 Comments Email Print
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* Price chart for WYNN RESORTS LTD. Click flags for important stories.
WYNN:US201.517.64 3.94%
Wynn Macau Ltd. (1128) 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. (WYNN) 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. (1928) and Galaxy Entertainment Group Ltd. (27) 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.


Photographer: Lam Yik Fei/Bloomberg
Vehicles drive past the Wynn Macau casino resort, operated by Wynn Resorts Ltd., in Macau, China.
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.

To contact the reporter on this story: Vinicy Chan in Hong Kong at [e-mail]

To contact the editor responsible for this story: Dave McCombs at [e-mail]

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Wynn Palace Project in Macau

The Company is currently constructing Wynn Palace, a full-scale integrated resort containing a 1,700-room hotel, performance lake, meeting space, casino, spa, retail offerings, and food and beverage outlets on Cotai in Macau. In July 2013, we signed a $2.6 billion guaranteed maximum price (GMP) contract for the project’s construction. The total project budget, including construction costs, capitalized interest, pre-opening expenses, land costs and financing fees, is $4.0 billion. We expect to open our resort on Cotai in the first half of 2016.

During the fourth quarter of 2013, we invested approximately $184.9 million in our Cotai project, taking the total investment to date to $704 million.