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We'll have more commentary in a separate note but we saw good and bad in the release. Wynn's Q1 Macau commentary, although well known, was positive. Wynn's Mass volume market share decline is troubling.

 

STEVE'S COMMENTS

  • Profitability and efficiency of their tables in Macau has continued to increase despite more competition
  • Tracking substantially ahead of 2009 in 2010, and that's even before the opening of Encore, which will give them another boost. Encore opening April 24th
    • Yes well the market is tracking up 54% y-o-y in the first 2 months... so there's nothing new here
  • Unfortunately, Las Vegas doesn't look so rosy.  Doesn't see things getting worse, but doesn't see any improvement either

Q&A

  • Net hold impact in Macau and in Vegas
    • Vegas, $15MM of EBITDA if they held 22%
    • In Macau held a little lower on VIP
    • Of course they didn't mention the high hold in Mass in Macau & higher then the run - rate hold on slots in Vegas. In Macau, Mass drop was pretty weak, only up 5% but better hold helped them by $15MM on gross revenues. Assuming 2.8% hold on RC they would have had $18MM more of gross table win.  Regarding slot hold in Vegas - 5.4% is their highest hold since 2005... the average has been about 4.7%, so higher hold helped them by $4.5MM in Vegas
  • 2009 corporate expenses would have been flat with 2008 if not for some unusual items
  • They have very good and tough credit assessment, have never had a charge. They are 45% reserved in Vegas and 65% in Macau - which is way more conservative than industry
    • That's true...
  • Philadelphia opportunity?
    • "Cutest casino" that we've ever seen - not slots in a box. No hotel rooms
    • Building 3,000 slot machines, Italian restaurant, Asian restaurant, and some poker tables.  The location is fantastic
    • Through an unrestricted subsidiary, not at the Wynn Las Vegas level. 
    • They know the region - they were in AC for seven years and dominated that market. Love the location of the Phily casino
    • 3 story structure including parking
  • Strategy in Las Vegas?
    • Capital structure is their salvation - they have the luxury to wait it out.  All he can do is do the basics better
    • They are opening Encore Beach Club, new night club, and improving Switch.  Beach Club opens May 21rst... will take the nightclub mentality into the daytime.  Nightclubs have 65% margins.
    • About to refurbish the rooms at Wynn because they are 5 yrs old
    • There's nothing that he can do with regard to customers getting used to lower ADRs - he can't have empty rooms
  • Think they will have a good 2010.  They are not holding high the first two months, they are at 2.8%
    • In Jan they did $174MM of gross VIP win, $42MM of Mass, and $16MM of slot win (In Jan 08, table revenues were $170MM).  We estimate that table revenue in Feb will be roughly $200MM (vs. $150MM last year)
  • In Macau 48% of their EBITDA comes from their general customer & slots (but their "general" customer is a lot better than just Mass- it includes a lot of direct play and their Mass is fairly "premium")
  • If another regional opportunity presents itself they will jump on it because they have the resources to do so
  • Macau is "maturing" ... said it in the sense of the facilities present
  • "We're more of a Chinese company" than US company at this point
  • Very keen about their Cotai project, "could be the  most beautiful project in the world after Encore".  They are constrained by the approval and their own planning process.  It will cost several billion. Will not have thousands of rooms.  "We raise our money before we break ground"...Ouch shot at Sheldon...
  • Is it too early to say that 2011 will be better?
    • Strictly convention booking - yes 2010 is better than 2009 and 2011 is better than 2010. But its complete BS to extrapolate that into total market results. It's crazy to extrapolate what 2011 will look like based on a few bookings on the books... thank you Steve for being honest. 
  • Are they worried about Singapore? Well, LVS designed the FS to steal their business 25 minutes away and that didn't happen
  • Southeast Asian customers are less than 5% of their base
  • Doesn't think that the Singapore market will be a threat to Macau - it will be primarily a Southeast Asian gaming market - people within a 1-2 hour drive.  However, that part of the world also has a large muslim population which doesn't really gamble
  • No, Encore is not what they thought it would be.  Thought that it would generate $250MM of EBITDA- clearly it didn't do it.  It was conceived in a different market. Don't know if they would have made even less without it, but would have an extra couple billion of cash... obviously would not have built it today if he knew what he knows today