WHAT DOES THE RECENT DATA SUGGEST FOR ENCORE?

Wynn Encore Macau has been open over four months.  While still preliminary, we took a look at the incremental revenues and EBITDA from the new property.

 

 

How is Encore doing?  Based on the first four months of data – admittedly preliminary – we’d definitively say that Encore is doing, well, okay.  We look at the Encore contribution in two ways:  1) by calculating the incremental market share gain and deriving an estimate of EBITDA and 2) calculating the incremental EBITDA from Q1 (pre-Encore) to Q2 (post-Encore) and adjusting for the hold differential.

 

In Q2, Wynn generated $216m in EBITDA versus $181m in Q1.  After adjusting for the fact that Encore was only open for 72 days in the quarter and hold percentage was significantly higher in Q2 and Q1, we calculate the annualized incremental EBITDA from Encore was $83 million.  Encore cost $600 million to build so the ROI per this method was a respectable 14%.

 

The second methodology yields a lower ROI of 11%.  Given the market growth from Q1 to Q2, we decided to look at the Wynn Macau VIP market share following the opening of MPEL’s City of Dreams on June 1, 2009 but before the April 21st opening of Encore (June 2009 through March 2010 period) and compare it to the May-August period (post Encore).  We are focusing on VIP because Encore did not add any Mass tables.  In fact, according to the numbers, Encore added nothing to Wynn’s Mass share.  The 2.2% increase in market share would generate approximately $64 million in annualized incremental EBITDA per our math.  See the chart below.

 

WHAT DOES THE RECENT DATA SUGGEST FOR ENCORE? - wynn2

 

So the jury is still out on Encore.  However, Wynn’s post Q2 market share has been substandard and trending lower.  I guess we’ll just have to wait and see.


Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

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