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Macau's Growth Fuels Wynn Resorts

Wynn Resorts (NASDAQ: WYNN  ) wowed investors with its earnings report last night, growing faster than Macau despite a location in the "Old Macau." It's a surprising result because Cotai has been stealing players away from the Macau Peninsula since Las Vegas Sands (NYSE: LVS  ) completed The Venetian Macau in 2007.

As critical mass has built on Cotai, and the hope was that Wynn Resorts and MGM Resorts (NYSE: MGM  ) could just stay afloat on the Macau Peninsula until their Cotai resorts are done. So, if Wynn is going to gain market share in the meantime, it's great news.

The numbers
Overall, Wynn's revenue was up 17.9% to $1.52 billion and EBITDA was up 25.1% to $498.4 million. Net income nearly doubled to $213.9 million, or $2.10 per share.

Macau was the clear winner with a 24.6% increase in revenue to $1.12 billion and a 32.1% increase in EBITDA to $374.2 million. Play improved in both the VIP segment, where Wynn specializes, and the mass market.

To give the quarter some context, I've laid out VIP (rolling chip volume) and mass market play (non-rolling chip volume) for Wynn and Las Vegas Sands' two most established resorts: The Venetian Macau and Sands Macau. The Venetian is on Cotai, which is like the Las Vegas Strip of Macau, and Sands Macau is on the older Macau Peninsula with Wynn.

Growth figures are year over year/quarter over quarter. For context, Macau's gaming grew 23.9% year over year in the fourth quarter and 12.3% quarter over quarter.


Rolling Chip Volume

Non-Rolling Chip Volume

Revenue per Room

Wynn Macau

$34.4 billion


$292.9 million




The Venetian Macau

$16.8 billion


$2.3 billion




Sands Macau

$5.8 billion


$1,025 million




Source: Company earnings reports.

The Venetian Macau clearly took a considerable amount of share over the past year, but there's surprising strength at Wynn. I would expect to see slow growth on the Macau Peninsula, but that's not necessarily the case. Sands Macau's VIP play is slowing but the mass market is doing well, and what was shocking this quarter is that Wynn beat Macau's growth both in comparison to last year and last quarter. It's taking share despite having an inferior location.

Wynn Las Vegas made $100 million more last year than any other resort in Las Vegas. Source: Wynn Resorts.

I'll also point out that rolling chip volume was more than double The Venetian Macau and larger than that and Sands Cotai Central combined. Las Vegas Sands is clearly winning the mass market, but Wynn is dominating VIP play, so there are two ways to play Macau there.

What this means for gaming companies
If both Wynn and Las Vegas Sands are taking market share, someone is losing it. MGM Resorts and Melco Crown are the two U.S.-traded companies to report next, and I'd say it's more likely that MGM lost ground than Melco Crown on Cotai, but we'll have to see the numbers.

After Las Vegas Sands' strong numbers in Macau earlier this week, it was surprising to see Wynn with a strong quarter as well. This bodes well for the company ahead of the opening of Wynn Palace in almost exactly two years. If Steve Wynn is right, we'll all be wowed by the property and it'll easily be the company's most profitable resort.

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Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 31, 2014, at 2:24 PM, blackjackkid wrote:

    MGM was up over 100% for 2013 easily beating out both LVS and WYNN. Once again on a percentage basis, MGM will beat both of them this year as well due to their smaller market cap and higher leverage with Vegas rebounding as indicated in both companies' conference calls.

  • Report this Comment On January 31, 2014, at 2:28 PM, TMFFlushDraw wrote:


    That could very well be true. Leverage cuts both ways though so just be aware that the downside risk is much higher than WYNN or LVS.


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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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