Wynn Tumbles on Weak Results in Macau and Las Vegas

• Report this Comment On May 08, 2012, at 2:14 PM, spokanimal wrote:

  Nice, consise piece, Travis... but yes, I do have a comment.

  Although you did address the subject of normalization (referred to as "luck" in your piece), I think it deserved a bit more of a highlight than you gave it considering that you also made a contrast to Sands.

  In essence, Wynn and Sands were represented a substantial contrast in Q1, with Wynn playing unlucky and Sands playing very lucky... especially in Singapore. In fact, normalzing Sand's 70 cent EPS arguably takes it to a range of 62 to 66 cents (depending on whether you use a historic hold percentage of 2.85% for VIP or their recent moving average of closer to 3.05% for normalization purposes).

  All in all, Wynn missed modestly and Sands beat modestly in Q1 once you reasonably normalize the results.

  That, however, doesn't alter my strong preference for Sands over Wynn. Sands has progressively opened resorts in the planet's most coveted geographies while Wynn was busy with divorces (Elaine and Okada) and paying big dividends. Sands will essentially be opening 3, large Cotai resorts from a month ago until next spring... each with as many hotel rooms as Wynn will be finishing up with approximately 1/3 of a decade from now.

  Most importantly, however, is Sand's ramp-up in market share since last fall... much of it at the expense of Wynn (and other peninsula venues as you point out) and with a couple, Cotai Central hands still tied behind it's back.

  Now, if Sands can just increase the profitability of those new, 4-seasons junket suites, as Mr. Adelson has historically shown a penchant for doing, and pull off the same VIP remodeling trick at Venetian as it did in 4-seasons (it's current phase of the junket initiative launched last summer)... then perhaps we'll see another surge in Sand's market share...

  ... net of the impact of cotai central.

  Spokanimal

• Report this Comment On May 08, 2012, at 2:28 PM, cp757 wrote:

  Travis that must kill you to say "Las Vegas Sands is a better buy right now, trading at the same enterprise value/EBITDA ratio as Wynn even before accounting for Sands Cotai Central" That's the key to future growth. Sands Cotai Central could take adjusted property EBITDA of $456.4 million up +20.6% over last year in the first quarter to over 500 million in the second quarter. The Marina Bay Sands had a record adjusted property EBITDA of $472.5 million up +66.1% from last year but the second quarter will be even better. They had retail mall revenue at The Venetian Macao and Four Seasons Macao increased 29.8% to $36.6 million. The big story is the May market share for Las Vegas Sands is on track for 19% which means Sands Cotai Central is taking market share from the competition. This is what I have been pointing out for the last 6 months. Growth is what I want to see and the market is telling you they will not wait for 4 years to see that growth. Steve Wynn said he could not compete in Singapore because he had to many projects going and he said Cotai Central was "the stupidest idea I have ever heard in my life". He said that in 2002 so he will open the doors on that stupid place 14 to 15 years after he said that. Growth is what you buy in a stock and WYNN is dead money or "Small Growth" at best.

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