Post by Blitz on Aug 9, 2024 10:36:28 GMT -5
Analysts cut Wynn Macau Ltd year forecasts on China outlook
Aug 08, 2024 Newsdesk Latest News, Macau, Top of the deck
www.ggrasia.com/analysts-cut-wynn-macau-ltd-year-forecasts-on-china-outlook/
“Rising uncertainty” around China consumption trends has prompted JP Morgan Securities (Asia Pacific) Ltd to cut its estimate for Macau casino operator Wynn Macau Ltd’s 2024 and 2025 adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA).
In a Wednesday memo soon after the parent Wynn Resorts Ltd reported second-quarter earnings, JP Morgan cut by 5.2 percent - to just under HKD8.32 billion (US$1.07 billion) – its 2024 adjusted EBITDA forecast for the Macau unit, the operator of Wynn Macau and Wynn Palace.
For 2025, the brokerage trims its expectations for such EBITDA, to HKD8.09 billion, 13.4 percent down on its previous estimate, and potentially a year-on-year decline relative to general Macau-market progress seen in the post-Covid era.
This was “to reflect not only the company’s second-quarter [earnings] miss… but also a rising uncertainty around China consumption, amid deteriorating sentiment for upmarket/leisure consumers in recent weeks and months – as seen in seemingly weakening demand for European luxury goods, hotel stays, and even baijiu,” noted JP Morgan Seccurities’ analysts DS Kim, Mufan Shi, Selina Li, referring latterly to a category of Chinese alcoholic drink.
Morgan Stanley Asia Ltd said in a Wednesday memo, citing commentary from the Wynn group’s management, that the second-quarter “miss” was mainly from peninsula [Wynn Macau] and retail, but the company claims that retail sales were 95 percent of second-quarter 2019, and the luxury slowdown is well documented”.
The downtown Wynn Macau’s EBITDA “would have been US$122 million if adjusted for both mass and VIP win rate,” added Morgan Stanley.
Seaport Research Partners now expects Wynn Macau Ltd’s gross gaming revenue (GGR) to be HKD30.12 billion in 2024 and nearly HKD33.03 billion in 2025. Those numbers are down 2.3 percent and 1.0 percent respectively from its previous estimates.
Seaport also now forecasts Wynn Macau’s net revenue to reach nearly HKD29.79 billion for 2024 and HKD32.22 billion for 2025, down respectively by 2.3 percent and 1.6 percent from its earlier forecasts.
Capital allocation
“The one concern we have regarding Wynn [Macau Ltd] is its table count, which had declined in Macau compared to the prior concession period,” remarked Seaport analyst Vitaly Umansky in his latest memo on the company.
He also commented: “Wynn will not benefit as much from [market-wide] bass-mass recovery as some other operators. However, in the medium term there is plenty of upside on table win per day… for Wynn tables. The key for Wynn will be to remain an operator of choice for the higher end of the market in light of increasing competition from others.”
In terms of capital allocation for matters such as money returned to shareholders and share buybacks, Morgan Stanley analysts Praveen Choudhary and Gareth Leung observed: “Wynn Macau will review its dividend every six months, but we do not expect meaningful uptick in it due to high leverage, lower retained earnings at Macau level, high capex [capital expenditure] intensity… and no strict payout policy.”
The mention of capital intensity was a reference to the casino group’s gaming-concession related spending commitments to the Macau government, which Julie Cameron-Doe, chief financial officer of Wynn Resorts, had said during the second-quarter earnigns call were likely be in the range of US$350 to US$500 million between 2024 and the end of 2025.
The Wynn Macau Ltd board is to meet on August 15 when it may approve an interim dividend, according to a filing by the Macau unit.
Possible pursuit of casino resort projects in downstate New York in the United States, and in Thailand, might limit the ability of the group as a whole, to issue “large-scale dividends”, remarked Seaport’s memo.
“Wynn is not likely to institute large share buybacks or large scale dividends at this time due to potential high return on investment project opportunities in the pipeline, even though none are certain,” wrote Seaport’s Mr Umansky.
Aug 08, 2024 Newsdesk Latest News, Macau, Top of the deck
www.ggrasia.com/analysts-cut-wynn-macau-ltd-year-forecasts-on-china-outlook/
“Rising uncertainty” around China consumption trends has prompted JP Morgan Securities (Asia Pacific) Ltd to cut its estimate for Macau casino operator Wynn Macau Ltd’s 2024 and 2025 adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA).
In a Wednesday memo soon after the parent Wynn Resorts Ltd reported second-quarter earnings, JP Morgan cut by 5.2 percent - to just under HKD8.32 billion (US$1.07 billion) – its 2024 adjusted EBITDA forecast for the Macau unit, the operator of Wynn Macau and Wynn Palace.
For 2025, the brokerage trims its expectations for such EBITDA, to HKD8.09 billion, 13.4 percent down on its previous estimate, and potentially a year-on-year decline relative to general Macau-market progress seen in the post-Covid era.
This was “to reflect not only the company’s second-quarter [earnings] miss… but also a rising uncertainty around China consumption, amid deteriorating sentiment for upmarket/leisure consumers in recent weeks and months – as seen in seemingly weakening demand for European luxury goods, hotel stays, and even baijiu,” noted JP Morgan Seccurities’ analysts DS Kim, Mufan Shi, Selina Li, referring latterly to a category of Chinese alcoholic drink.
Morgan Stanley Asia Ltd said in a Wednesday memo, citing commentary from the Wynn group’s management, that the second-quarter “miss” was mainly from peninsula [Wynn Macau] and retail, but the company claims that retail sales were 95 percent of second-quarter 2019, and the luxury slowdown is well documented”.
The downtown Wynn Macau’s EBITDA “would have been US$122 million if adjusted for both mass and VIP win rate,” added Morgan Stanley.
Seaport Research Partners now expects Wynn Macau Ltd’s gross gaming revenue (GGR) to be HKD30.12 billion in 2024 and nearly HKD33.03 billion in 2025. Those numbers are down 2.3 percent and 1.0 percent respectively from its previous estimates.
Seaport also now forecasts Wynn Macau’s net revenue to reach nearly HKD29.79 billion for 2024 and HKD32.22 billion for 2025, down respectively by 2.3 percent and 1.6 percent from its earlier forecasts.
Capital allocation
“The one concern we have regarding Wynn [Macau Ltd] is its table count, which had declined in Macau compared to the prior concession period,” remarked Seaport analyst Vitaly Umansky in his latest memo on the company.
He also commented: “Wynn will not benefit as much from [market-wide] bass-mass recovery as some other operators. However, in the medium term there is plenty of upside on table win per day… for Wynn tables. The key for Wynn will be to remain an operator of choice for the higher end of the market in light of increasing competition from others.”
In terms of capital allocation for matters such as money returned to shareholders and share buybacks, Morgan Stanley analysts Praveen Choudhary and Gareth Leung observed: “Wynn Macau will review its dividend every six months, but we do not expect meaningful uptick in it due to high leverage, lower retained earnings at Macau level, high capex [capital expenditure] intensity… and no strict payout policy.”
The mention of capital intensity was a reference to the casino group’s gaming-concession related spending commitments to the Macau government, which Julie Cameron-Doe, chief financial officer of Wynn Resorts, had said during the second-quarter earnigns call were likely be in the range of US$350 to US$500 million between 2024 and the end of 2025.
The Wynn Macau Ltd board is to meet on August 15 when it may approve an interim dividend, according to a filing by the Macau unit.
Possible pursuit of casino resort projects in downstate New York in the United States, and in Thailand, might limit the ability of the group as a whole, to issue “large-scale dividends”, remarked Seaport’s memo.
“Wynn is not likely to institute large share buybacks or large scale dividends at this time due to potential high return on investment project opportunities in the pipeline, even though none are certain,” wrote Seaport’s Mr Umansky.