Sanford C Bernstein analysts have reduced their Wynn Macau EBITDA estimates by 6% for 2019 and 2% for 2020 to 2023 due to low VIP hold and weak high-end volumes – but their long-term expectation remains positive.
In a Monday note ahead of parent company Wynn Resorts’ upcoming 3Q19 earnings release, analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu warned of a softer than expected quarter for the company across the board, with Las Vegas and Boston also tipped for year-on-year declines due to low hold and slow slot machine ramp respectively.
Most notable however are revised estimates for Wynn Macau – which comprised around 72% of the group’s 2Q19 revenue – with the analysts stating, “Low hold in direct VIP and overall soft high-end volumes have negatively impacted results. The high-end remains soft due to a variety of macro factors.
“For Wynn Macau we reduce EBITDA by 6% for 2019E to reflect weaker high-end and reduce our 2020E-2023E EBITDA by ~2%.”
Bernstein is tipping Wynn Macau’s 3Q19 EBITDA to come in at HK$1.99 billion – down 28% year-on-year and 13% sequentially – and has subsequently lowered its target price for shares from HK$26.25 to HK$25.30 on the back of the China slowdown, RMB depreciation and trade war headwinds.
Nevertheless, in the medium-term analysts remain bullish, stating that “improvements in transportation infrastructure, growth of premium consumer and new capacity will support long-term growth in Mass – the execution of a supply driven market.
“As a sector, Macau gaming’s current valuation is attractive for investors willing to hold volatility and play the Macau recovery inflection. Wynn Resorts and Wynn Macau remains our top picks based on risk/reward asymmetry in the space.”
