Wynn Resorts (WYNN) Follows Las Vegas Sands’ (LVS) Lead And Blows Out Q3 Estimates

Las Vegas Sands (LVS) and Wynn Resorts (WYNN) Continue to Thrive in Macau

The Macau gaming industry continues to remain our favorite sector. The Q3 numbers released by both Las Vegas Sands (LVS) and Wynn Resorts (WYNN) in the past week reaffirm this thesis. Las Vegas Sands kicked off the Macau earnings on the 17th, reporting earnings of $0.78 per share on revenue of $3.57 billion, analysts had predicted $0.75 EPS and $3.46 billion in revenue. Following today’s close WYNN reported revenues of $1.39 billion and $1.84 EPS, easily surpassing the $1.37 billion in revenues and $1.66 earnings per share that the street was looking for.

Wynn’s Growth Solid But Will Remain Limited Until Wynn Palace Opens in 2016

While Wynn’s numbers continue to impress, it is worth noting that their growth prospects are limited until 2016 when they open the Wynn Palace on Macau’s Cotai strip. Until then expect growth rates near 10% as they continue to refine their Macau operations and gross gaming revenues for the region as a whole remain growing nearly 20% annually. The Wynn Palace project sports a $4 billion budget and is expected to be one of the most impressive properties in Macau when construction is completed, featuring one of the biggest casino floors in the region and a 1,700 room hotel.

U.S. operations continued to remain stagnant as the Las Vegas gaming market continues to struggle. Revenues were up 1% year over year for the quarter totaling $392.5 million. Adjusted property EBITDA was $106.5 million, down 3.5% from the past year.

Las Vegas Sands Firing On All Cylinders In Macau and Singapore

CEO Sheldon Adelson reported that their Macau property portfolio attracted over 16 million visitors in the past quarter, generating revenue of $2.34 billion and $784 million of adjusted property EBITDA. The Venetian Macao remained their top property in terms of sales and profitability, generating revenues of $935 billion and $317 million of operating income. Sands Cotai Central, the newest property in the Sands China portfolio, looks poised to overtake The Venetian as their most valuable casino in Macau. After opening their second phase, Sands Cotai Central experienced revenue growth of 149% year over year in the most recent quarter, swelling to $736 million in Q3. A third phase is expected to include a St. Regis hotel and branded residences, which will only drive further profitability. The Four Seasons Hotel Macao also continued to perform for LVS, with revenues up 47% and EBITDA up 107.5%. The only slacker in the Sands China portfolio was the dated Sands Macao, which still grew EBITDA 11% year over year despite revenues falling by 3% to $305 million.

Pictured above, Marina Bay Sands is the most impressive and expensive property in the LVS portfolio, and surprisingly to some resides in Singapore not Macau. Opened in 2011 and carrying a price tag of S$8 billion, Marina Bay Sands’ operating results continue to justify management’s decision to invest so heavily in the project. As one of only two licensed casino operators in Singapore, Las Vegas Sands stands to benefit greatly from the swelling in wages and net worth in the city-state. Revenues at Marina Bay Sands grew 24% during Q3, while adjusted property EBITDA jumped 43% to $373.6 million. Having lived in Singapore this year I can personally attest to the marvel that this casino/ resort is, and have witnessed first hand the huge appetite for gambling that exists in Singapore.

LVS and WYNN Results Bode Well for MGM and MPEL

We now look ahead to MGM Resorts (MGM) reporting on October 31st and Melco Crown Entertainment (MPEL) on November 5th to round out another strong earnings season in Macau. Already displaying great strength throughout the year, look for MGM and MPEL to also exceed consensus estimates this quarter on the heels of gross gaming revenues for Macau as a whole beating expectations the past few months. Initial numbers from Golden Week in Macau also came in ahead of expectations as reported two weeks ago and could lead to upward estimate revisions for Q4. Previously the subject of a feature report, Melco Crown Entertainment remains our top pick in the sector.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

One Response to Wynn Resorts (WYNN) Follows Las Vegas Sands’ (LVS) Lead And Blows Out Q3 Estimates

  1. To get right straight to the point here (time is constrained when illuminating Hoium critique), gaming table development in Macau is restricted to simply north of 3% yearly, and there are some, major resorts opening in Macau in the 2016 (and, in all likelihood, 2017) time allotment that Wynn is bolted into. And it sounds like they are not going nowhere…

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