Here are excerpts from the latest earning conference call October 2009.
“Steve Wynn: In the summer, things started to change. Macau picked up and in the last few months, Las Vegas because of our high-end business, has -- and I’m spilling over into October a little bit, but to give you a general impression, if things continue the way they are, we are going to equal or beat 2008 in Las Vegas and we are going to equal or beat last year in Macau. All things considered, that isn’t as bad as it might have been and so it’s one of these strange -- if for example in Las Vegas with Encore we had achieved our average room rate of $300 with a 91% occupancy, our revenue per occupied room would have resulted with normal margins and $150 million more annually in EBITDA at the rate we are going. It would have been $120 million to now and another $30 million in the last 20% of the year
… …
(talking about Depreciation and Interest)
In 2008, for example, to talk about capital structure and what it means, there is such a focus by the press. So many people on this call, our competitors who are on the call and the press focus so intensely on top line numbers, market share, EBITDA -- we forget for a moment with all the rhetoric that it doesn’t really mean a thing. What matter is how much money is left. You’ve got to pay interest. You’ve really got to pay depreciation. In our business, the carpets wear out, the equipment has to be replaced. Depreciation is a real expense in our business and when you don’t spend it, you are hawking the future. You are losing the kind of environment that gives these businesses their franchise.”
WYNN Macau market share is about 14-18% currently. It has decreased from 20% due to MELCO CROWN MPEL City Of Dreams casino.
However, with the opening of ENCORE Macau in Spring, WYNN Macau will gain back their market share. Note that Macau gaming revenue for the month of November, December and January was at record high year on year.
October 1.59bln (42% increase)
November 1.5bln (50% increase)
December 1.48bln (48% rise)
January 1.67bln (65% rise)
2009 Q4 Gaming revenue is 4.57bln
2009 Q3 Gaming revenue climbed 22.3% to $3.81 billion
So we should expect a much better casino revenue in Q4 for WYNN Macau.
Similarly, the Las Vegas market is also increasing, however, they do not release their revenues as often as Macau.
WYNN Resorts stocks are on sale now at $61.35, this is a big discount counting the growth that WYNN is able to sustain. This is with the opening of WYNN Encore in Macau.
To reiterate that more is not always better, Las Vegas Sands may have more properties and the upcoming Singapore Casino is surely a steal, however, as Steve Wynn says, the most important thing is the money that is left after paying off the depreciation and interest. High interest payment pose a risk in gaming stocks financial statement. This is evident as seen from MGM Mirage lackluster performance and was almost at the brink of bankruptcy.
WYNN has started 20cts regular dividends.
WYNN is the most premium brand in the casino industry.
ANALYST targets $70-$80
STRONG BUY at $60 level.
Short term profit target is $65 (week), longer term, $80
