Potentially the highest Q4 earnings upside in gaming
It should be no surprise to our readers that we are expecting a significant Q4 beat over consensus on all metrics. We’ve been consistently touting Wynn’s surging Macau market share over the past 3 months. Not only has the market exploded in Q4 but Wynn’s share has risen 150bps from the first 9 months of the year and 210bps from Q3 to 16.0% in Q4. Importantly, Wynn’s highly profitable Mass business was up 43% YoY in Q4.
We are projecting Wynn to report $1.2BN of revenues and $316MM of EBITDA, 15% ahead of Street revenue and 20% above EBITDA expectations. Our EPS estimate is now a whopping $0.83, 54% ahead of consensus. Not surprisingly, our above Street estimates can be attributed entirely to outperformance in Macau, while our Vegas numbers are in-line with consensus.
Here are the details:
We estimate that Wynn Macau will report net revenues of $885MM and EBITDA of $263MM. Below are some of the details behind our estimates.
- VIP net table win of $608MM
- Remember that Wynn generates the highest flow through on junket revenue in the market due to low commission rates
- Assuming 12% direct play, we estimate that WYNN’s RC volume grew 66% YoY or 29% sequentially, reaching $28BN. Wynn added (2) junket rooms in the quarter which contributed to the growth
- Hold was above normal at 3.1% - much higher than last year’s easy 2.7% hold
- We assume a rebate rate of 0.93% or 30% of hold
- Mass table win of $170MM, up 45% YoY and 23% sequentially
- Slot win of $61MM
- Non-gaming revenues of $80MM and promotional expense of $33.5MM
- Non-gaming expenses of 20.4MM
- Variable expenses of $492MM, consisting of taxes, gaming premiums, junket commissions and doubtful accounts
- Fixed expenses of $110MM compared to $102MM in 3Q2010 and $78MM in 4Q09
WYNN Las Vegas
We estimate that Wynn Las Vegas will report net revenues of $328MM and EBITDA of $72MM. Below are some of the details behind our estimates.
- $141MM of net casino revenue
- 7% YoY increase in table drop to $587MM and $123MM of table win, assuming 21% hold (compared to 23% last quarter and 19% last year, respectively)
- 3% YoY decrease in slot handle offset by higher YoY hold of 5.9%, producing slot win of $42MM
- Gaming discounts of 15% of gross win
- $236MM of non-gaming revenue and $49MM of promotional expenses
- 3% increase in casino expenses to $71MM – flat with 3Q expenses and total operating expenses of $257MM (compared to $258MM in 3Q2010)