THE HEDGEYE EDGE
We see long term, sustainable growth in Macau revenues and profits as China remains well underpenetrated, despite strong recent growth. Wynn Resorts (WYNN) looks best positioned for at least the next few quarters due to expected outperformance of the high end segment.
KEY THESIS POINTS
We’ve been positive on Macau since early 2016 and WYNN has led the way in terms of performance, particularly on the VIP segment. We believe there is room for further appreciation as VIP continues its impressive ramp up and the premium mass segment grows. In fact, VIP and premium mass are currently the drivers for the +20% monthly gross gaming revenue growth we’ve been seeing in Macau. Here are some other points on why we like WYNN at current levels:
- We believe WYNN should post the best quarter of the Macau operators, even relative to Street estimates which have been rising lately.
- Over the near term, WYNN should continue to be the top beneficiary of outsized VIP growth as the company generates a market leading 60-65% of its revenue from that segment.
- The corruption crackdown in Mainland China appears to have eased considerably over the last year, offering a tailwind to the VIP and premium mass segments.
- Wynn Macau (Peninsula) cannibalization is kept at a minimum.
- Casino cost control is driving higher profitability at Wynn Las Vegas.
Click here or the image below to watch a presentation with Gaming, Lodging & Leisure analyst Todd Jordan with additional insights on our longer term views of Macau and Wynn Resorts.
MACAU SECTOR SPOTLIGHT With Todd Jordan
Click here to access the associated slides.