Wynn Macau is likely to post the highest EBITDA growth of Macau’s six casino operators in 3Q17, driven by improved performance at Wynn Palace. But industry EBITDA looks set to slow considerably from 2Q17’s year-on-year growth due to “slowing mass, risk of premium mass and macro slowdown in China” according to Morgan Stanley analysts.
In a Thursday note, Praveen Choudhary, Alex Poon and Thomas Allen predict that Macau industry EBITDA will grow 7% quarter-on-quarter in 3Q17, “which is positive,” but will nevertheless slow to 16% year-on-year after clocking 28% year-on-year growth in 2Q17.
They add that Wynn and Galaxy stand to be the top performers, with Wynn’s Property EBITDA to grow 10% quarter-on-quarter to US$328 million.
“The main driver is Wynn Palace, US$120 million (+37% quarter-on-quarter), which made losses in VIP in April, giving an easy comp (bad luck of US$20 million in 2Q17 EBITDA),” they said.
Morgan Stanley warned that MGM China could show a sequential EBITDA decline due to lost market share in the premium segment, while EBITDA estimates for Wynn and Galaxy for 2017 to 2019 have been raised by 3% to 5% and their price targets by 9% and 3% respectively “mainly thanks to strong VIP growth in 3Q17.”
“Our revised 2017 to 19 EBITDA estimates are 4% to 6% consensus for Wynn Macau and 7% to 12% above consensus for Galaxy,” it said.
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