Las Vegas Sands (LVS -8.66%) and Melco Crown (MLCO -2.66%) get most of the attention in Macau, and rightfully so, but Wynn Resorts (WYNN -1.42%) is performing quite well at its location on the Macau Peninsula. This of course leads Foolish investors to wonder, is there an opportunity in the shares of this gambling behemoth?
Wynn reported third quarter earnings after the market closed yesterday and while the company isn't growing as quickly as Las Vegas Sands or Melco Crown it's holding its own in Macau. Revenue was up at Wynn Macau to $997.6 million, up 9.6% from a year ago, and EBITDA rose 12.6% to $329.1 million. The growth is surprising given the fact that most gaming growth is trending toward Cotai, where the newer resorts are.
Comparing to Las Vegas Sands' resorts shows that Wynn is still growing more slowly than The Venetian Macau but it's not the operational gap most expected. The table below uses rolling chip volume and non-rolling chip volume as a gauge of VIP and mass market play respectively because they pull luck out of the equation.
|
Rolling Chip Volume |
Non-Rolling Chip Volume |
EBITDA | |
|---|---|---|---|
|
The Venetian Macau |
$14.2 billion +26.4% |
$2.0 billion +75.7% |
$357.2 million +19.5% |
|
Sands Macau |
$5.2 billion -23.3% |
$877.4 million +18.7% |
$89.9 million +11.1% |
|
Wynn Resorts |
$30.3 billion +9.8% |
$239.8 million +13.5% |
$329.1 million +12.6% |
Source: Company earnings reports.
Any growth at all in Macau is good news and considering that gaming grew 19.6% and players trended toward Cotai I think these are good results. Of course, the real game-changer comes when Wynn opens the Wynn Palace in early 2016, but that's a long wait for investors.
Wynn eyes growth
A lot of the conversation during Wynn's conference call surrounded growth, particularly a potential project in Boston. The $1.2 billion project got a boost last week when Caesars Entertainment dropped out of the race. According to Steve Wynn, the bidding process has been maddeningly complex, but that might favor Wynn Resorts at the end of the day. Wynn has the balance sheet and history to pass regulatory muster, so if the project is viable financially the company will muscle through.
Japan is also a hot topic for Wynn Resorts, Las Vegas Sands, and Melco Crown. None of these companies are giving up any projections or project plans but the Japanese market could easily be over $10 billion, so there will be a fight for licenses there.
Maybe the biggest news on this call was Wynn's plans for Phase 2 on Cotai. The project will be more focused on non-casino development, including a 15,000 seat Wynn Diamond Coliseum and Wynn Diamond Hotel, with 1,300 square foot suites aimed at the premium mass market and up. Full details aren't being released but this will be a big addition to the Wynn lineup.
Foolish bottom line
Wynn Resorts isn't growing as quickly as Cotai centric rivals Las Vegas Sands and Melco Crown, but no one expected it to. The fact that the company is growing at nearly double digits is impressive and bodes well for the company until Wynn Cotai is complete. At 11.8 times EBITDA the company isn't cheap but investors with a long view are still getting decent value considering the growth potential.
