Wynn Macau falls on earnings, delayed opening of Cotai resort

Wynn Macau Ltd. dropped in Hong Kong trading yesterday after the company’s earnings missed estimates and said its new casino resort in the city would be delayed.
The Macau casino operator fell 1.2 percent to HKD21.55. The decline came after shares of its parent, Wynn Resorts Ltd., dropped as much as 5.6 percent to USD147.05 in extended trading after results were announced. The stock had gained 6.1 percent to $155.80 at the close yesterday in New York.
Wynn Macau reported fourth-quarter adjusted property earnings before interest, taxes, depreciation and amortization fell 36 percent to $241.2 million from a year earlier. That compared with the $249 million median estimate of nine analysts surveyed by Bloomberg News.
Casino operators in Macau, the world’s largest gambling market, have seen a sharp decline in play by high rollers in recent months. Chinese President Xi Jinping has been cracking down on corruption on the mainland, a move that has caused the wealthy there to hold back on conspicuous consumption.
“We think negative earnings revision will continue; management sounded downbeat on near-term outlook for Macau,” Morgan Stanley analysts led by Praveen Choudhary wrote in a note yesterday. The resort’s delay was also a concern, they said.
Wynn Resorts – the company founded by billionaire Steve Wynn – is building a $4.1 billion resort on Macau’s Cotai Strip. The company was told this week by its construction contractor that the project won’t be finished in time for the Lunar New Year in February 2016 because of the timing of permits. Wynn said the company hasn’t been able to hire all the construction workers it wanted.
“I do believe that for all of Chinese businessmen, there is at the moment a bit of uncertainty as to what the future will hold, because so much of everything in China depends upon the policy of the central government,” Wynn, the company’s chairman and chief executive officer, said on a conference call after the earnings announcement.
Wynn Resorts reported fourth-quarter profit and sales that missed analysts’ estimates as revenue in Macau declined. The Macau unit contributed two-thirds of the group’s revenue in the fourth quarter.
Table games turnover in the VIP segment dropped 40 percent year on year to $20.7 billion for the fourth quarter, according to a statement yesterday. Mass-table win – or revenue from mass- market gamblers – fell 15 percent to $249 million in the quarter. The company’s January mass business in Macau rose 26 percent year on year, Wynn said.
“The changes in China have had a negative effect on all of the top-end business, whether that means retail top-end like Rolex and Louis Vuitton or whether we’re talking about the high- end gaming and junkets in the VIP section,” Wynn said. Stephanie Wong and Christopher Palmeri, Bloomberg