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In the realm of Macau gaming, WYNN’s Q3 should be lackluster.  Time for a special dividend.

We estimate that Wynn will report $1,317MM of revenue and $388MM of EBITDA when they report 3Q Wednesday after close – a little ahead of Street estimates.  Market share declines, China macro concerns, and “lackluster” Q3 results may not be enough to get investors juiced.  The announcement of a special dividend would help but even that is pretty much expected by the Street.  While WYNN is the high quality gaming play, we struggle to find a catalyst for near-term stock appreciation.

Detail:

 

Wynn Macau

We project Q3 Wynn Macau revenues of $947MM and $307MM of EBITDA, 2% and 3% higher than consensus, respectively

  • $890MM of net casino revenue – down 4% sequentially, but up 42% YoY.  It is not unusual for Wynn to have a seasonally weaker quarter in 3Q vs. 2Q in Macau.
    • Gross VIP win of $907MM and net VIP win of $630.5MM
      • Assuming 8% direct play, we estimate $30.7BN of direct play and 2.96% hold
      • Rebate rate of 90bps or 30.5% of the win rate
    • Mass win of $196MM
    • Slot win of $63MM – a pretty large fall off from $75MM last quarter
  • Non-gaming net of promotional expenses of $58MM compared to $53MM in 2Q
    • $40MM of promotional expenditures in line with the last 3 quarters
    • $97MM of non-gaming revenues
      • $27MM of room revenue
      • $25MM of F&B
      • $46MM of retail, entertainment and other revenue
  • Variable expenses of $518MM
    • $455MM of taxes
    • $57MM of junket commissions (above the rebate rate), or a 41.2% RevShare – in-line with last quarter
  • $26MM of non-gaming expense
  • $95MM of fixed expenses compared to $99MM in 2Q and $85MM in 3Q10

 

Wynn Las Vegas

We expect another quarter of outperformance vs. expectations at Wynn’s Las Vegas properties.  We expect Wynn Las Vegas to report $370MM of revenue and $99MM of EBITDA, 3% and 6% ahead of consensus, respectively.

  • $140MM of net casino revenue
    • Table win of $124MM assuming a 5% YoY decline in drop and 24% hold
    • $176MM of slot win assuming 5% YoY growth in handle and 5.8% win rate
    • $26MM of discounts or 15.8% of gross casino win – compared to 15.9% in 2Q and 15.1% in 3Q10
  • $88MM in room revenue
    • $230 ADR and 88% occupancy – equating to a 9.5% YoY RevPAR increase
  • $125MM of F&B revenue and $57MM of revenue from entertainment, retail and other
  • $41MM of promotional allowances or 29% of net gaming revenue – compared to $43MM in 2Q11 and $43MM in 3Q10.
  • Total operating expenses of $271MM compared to $258MM in 2Q11 and 3Q10. Expenses are typically higher in the 3Q compared to the 2Q for Wynn Las Vegas – at least over the last 3 years .
    • We expect casino expenses to increase 3% YoY to $73MM compared to $70MM and a 2% YoY in 2Q11
    • $33MM in room operating expenses (5% YoY increase) or a CostPAR of $87