Wynn Macau shares surge as casino business seen untroubled by Steve Wynn resignation
Analysts say the casinos have their own management team and will continue to benefit from a sound business outlook, while Wynn’s resignation avoids any reputational damage
Shares of casino operator Wynn Macau jumped 8 per cent in Hong Kong on Thursday after the company’s former chief executive and chairman, Steve Wynn, said he would quit all management roles at the company amid sexual assault allegations made against him by current and past employees.
Wynn Macau closed at HK$27 on Thursday, with analysts saying that Wynn’s departure would lessen the risk of reputational damage to the business and would not affect operations which were overseen by a seasoned and solid management team. The shares had tumbled at the end of January when the allegations against Wynn had first become public.
“We foresee limited operational impact from Wynn’s departure, since a solid tenured management team, which has long been in place in Macau, remains intact,” said Jamie Soo, regional head of gaming research at Daiwa Capital Markets. He added that business trends in Macau have remained robust and Wynn Macau would be a key beneficiary of sustained growth in the premium gambling segment. He has a target price for the stock of HK$27.
Wynn, 76, has also resigned as chief executive and chairman at the parent company of Wynn Macau, Las Vegas-based Wynn Resorts. He has denied all the accusations and called them “preposterous”.
Matthew Maddox, a long-serving Wynn executive, replaced Wynn as chief executive of Wynn Macau and parent company Wynn Resorts. Hong Kong entertainment tycoon Allan Zeman was named as non-executive chairman of Wynn Macau.
Analysts at Deutsche Bank said in a report that they expected Wynn Macau to run strongly without Wynn as CEO, and they maintained a “buy” rating for the company with a target price of HK$32.
UBS meanwhile said the fundamentals of the casino business are positive and predicted that its dividend payout may surprise, reiterating a “buy” rating with a target price of HK$33.40. Bank of America Merrill Lynch also kept Wynn Macau at “buy” with a target price of HK$32.
Wynn Macau’s share price peaked at HK$37.40 in 2014, but had plunged to a low of HK$7.24 in early 2016 after Chinese authorities ordered a crackdown on mainland gamblers.
Of the 23 analysts who cover the company, 14 gave “buy” ratings and the rest “hold”, according to Bloomberg.