Wynn Macau profits slump 18pc
Income drops to US$196.8 million in quarter in worst results among listed gaming resorts
Wynn Macau, controlled by Las Vegas' Wynn Resorts, yesterday reported the worst results among all listed gaming resorts in Macau by posting an 18 per cent year-on-year drop in net profit for the fourth quarter last year.
Shares in the company dropped up to 4.1 per cent yesterday before closing down 2.3 per cent at HK$21.25.
Wynn's net profit fell to US$196.8 million from US$239.9 million while its competitors Sands China and Galaxy Entertainment saw their profits surge in the quarter on the back of expansion on the Cotai Strip.
Wynn Macau's revenue fell 10 per cent year on year to US$898.7 million even though gaming revenue in Macau as a whole rose in the last quarter.
"We believe Wynn Macau's earnings outlook will remain unexciting, until its new project in Cotai opens," a Credit Suisse report said. The US$4 billion Cotai project will not be completed until at least 2016.
Wynn's market share has not only been undercut by casinos in Cotai but also its peers in the peninsula. Its revenue from high rollers flat-lined at US$27.7 billion despite adding a 14-table junket room in November.
"We think it is because MGM's new 40-table junket rooms were more impressive in design and scale, and MGM's junkets also have better customer reach," a Deutsche Bank report said.
Analysts said Wynn's stringent cost control measures coupled with the fact that it paid the lowest junket commission rate in Macau made its VIP revenue growth lag behind its peers.
"Murder tough," Steve Wynn, the chairman of Wynn Macau and Wynn Resorts, said yesterday at an analysts' conference, referring to the fierce competition in Macau's gaming market. "Those guys have blood in their eye."
Revenue in the VIP segment in Macau was US$27.7 billion in the fourth quarter, down 6.6 per cent year on year. Table games in the mass market rose 1 per cent to US$700 million while slot machines handled 16.4 per cent fewer bets, according to the filing by Wynn to the Hong Kong stock exchange yesterday.
Gaming revenue in Macau rose a lower-than-expected 7.3 per cent year on year last month as the traditional lull before the Lunar New Year set in, Reuters reported. January's revenue, at 26.9 billion patacas, was weaker than analysts' forecasts of 10 to 12 per cent growth.