WYNN: IT’S NOT JUST Q4 I’M WORRIED ABOUT

I think I’ve expressed my concern surrounding WYNN’s Q4 pretty clearly over the past several weeks so I’d like to turn my attention to 2009. Unfortunately, the picture looks even worse. In 1H 2008, the Rolling Chip (RC) environment was flooded with credit and Wynn Macau was a major beneficiary. Moreover, Wynn’s Mass Market (MM) business benefited from loose visa restrictions in mainland China and an upswing in credit directly from the casino. Wynn Macau knocked the cover off the ball, generating 70% and 27% growth in RC and MM revenue, respectively, in 1H 2008.

What a difference a year makes. Junket credit has dried up and direct credit has been tightened. Strict visa restrictions will likely impede Mass Market growth. Q4 2008 was the worst quarter of the year in both segments. The first chart provides quarterly revenue and year over year growth by segment for Wynn Macau for 2008-2009. Assuming a Q4 run rate for all of 2009, Wynn Macau’s 1H 2009 RC and MM revenue could fall 28% and 18%, respectively. While there is some seasonality, particularly in Q1 with Chinese New Year, the offset is the continued deterioration in the credit situation.

The second chart details how overly optimistic analysts appear to be with their Wynn Macau and WYNN corporate EBITDA estimates. We estimate Street EBITDA projections for 1H2009 may need to be reduced by 24% and 18%, respectively, for Wynn Macau and WYNN corporate.

Difficult comps and deteriorating trends
Analysts not bearish enough

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more