Wynn Macau is estimating that operating revenues during the first two months of the year totaled between $391 million and $395 million, a top-estimate increase rise of 57 percent yearly, based on strong Chinese New Year results and continued patronage in February.
The group estimates that adjusted property EBITDA for the period was between $94 million and $98 million, skyrocketing past the $4.5 million recorded in the same two-month period of 2021.
The group even notes that it expects its GGR market share during the period was above 2019 levels, at 15 percent, ‘despite the meaningful changes in the Junket VIP environment’.
Looking at Chinese new year specifically, the group notes that ‘our direct VIP turnover was 40 percent above 2019 Chinese New Year levels,’ reflecting the pent-up demand from the three-year restrictions put in place due to COVID.
The group estimates that during the CNY period its Macau operations saw ‘approximately $4 million of hold-normalized adjusted property EBITDA per day’- as it saw ‘lower than expected VIP table games win as a percentage of turnover’.
The CEO of Wynn Macau’s parent company, Wynn Resorts, had previously noted that mass table drop during CNY reached 95 percent of 2019 levels, with direct VIP 40 percent above pre-COVID CNY levels.
But the revenues didn’t stop flooding in after CNY, with the group noting that in the four weeks after the holiday ‘our mass market drop recovered to 82 percent of the corresponding 2019 period, and direct VIP was 20 percent above 2019 levels’.
The results are strong, given that Wynn Macau posted a 44 percent increase in its operating loss for 4Q22 as VIP play fell off and Wynn Palace underperformed.
Beating expectations
Analysts at Deutsche Bank note that the two-month results imply the first quarter could see $600 million in net revenue, outperforming its estimates of $522 million.
In addition, the results indicate a much stronger EBITDA result for the quarter than predicted – at up to $146 million, compared to the analysts’ predictions for $85 million.
In fact, the group notes that February performance for Wynn ‘was better than that in January, from both an EBITDA and margin perspective, despite the January CNY Holiday period’, noting that the group’s Cotai Strip property – Wynn Palace – is outperforming its peninsula property – Wynn Macau.
Issuance of $600 million in bonds
In the Tuesday filing indicating the two-month results, the group also noted that It was planning on issuing a new tranche of bonds ‘to professional investors only’. A Wednesday filing indicates that the issuance comprises $600 million, with a bond conversion price of HK$10.24 per share, a premium of 26.8 percent over the last closing price and a 24 percent increase over the average closing price over the past five days.
In total, the bonds will convert to some 459.77 million shares, or 8.8 percent of the total issued share capital of the company before the enlargement. Net proceeds after commission and expenses are expected to reach $586 million.
The share purchasers ‘have agreed to purchase the Bonds’ already, which will be used for ‘general corporate purposes’ – with expectations they will be used to pay down $600 million in notes due in 2024.
