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Takeaway: We expect a miss and sobering commentary from Macau and Vegas.

WYNN Q4 ESTIMATES

Revenue

  • $1.18 billion (Hedgeye) vs $1.19 billion (Street)

EBITDA

  • $373 million (Hedgeye) vs $385 million (Street)

QUESTIONS FOR MANAGEMENT

  1. Latest on Wynn Palace budget/opening date.
  2. Update on the construction labor situation?
  3. Wynn Palace table numbers
  4. More color on the 2 VIP rooms opening in Jan/Feb
  5. How much cost cutting is available in OpEx other than labor?
  6. How are junket commissions trending in a declining revenue environment?
  7. Mass promotional environment
  8. Thoughts on reinstating proxy phone betting
  9. What's behind the recent improvement in Wynn's Mass business?

FORWARD LOOKING COMMENTARY

Smoking

  • The new regulations in smoking, the turmoil in Hong Kong late in the month of October and, of course, the policy of the central government in being very, very aggressive about what appeared to be a misconduct and corruption of the government has put a lot of the wealthy businessmen in the foxholes.
  • The smoking rooms established at Wynn Macau have been successful. Wynn’s in the process of establishing an additional smoking room based on location. But overall, they don’t believe that that’s had a huge effect on business. There’s been some effect but it’s been marginal.

 

Wynn Cotai

  • As far as construction goes, Wynn states they are, on target, on budget and on time.
  • Cotai’s budget remains within 1% of expectations.
  • The Wynn Palace is very luckily set up for the smoking ban due to deciding to build balconies for all of the VIP and Mass rooms. This will allow players to gamble and then step outside to smoke.

 

Mass competition

  • Increased margin pressure in Macau. Competition is viewed as extremely intense.
  • Mass market area margins have been fairly constant over the last three quarters.  Wynn has seen its mass area and premium mass area margins stabilize.
  • Wynn remains confident he can secure 550 gaming tables from the government  

New junket rooms

  • Junkets conservative
  • Building junket rooms in 2 gorgeous VIP areas
    • We believe it could be 36 tables in total, opening in mid-Feb.