Recent analysis of Google search data and observation of market trends suggest that Wynn Macau’s market share could rise higher than expected, notes Morgan Stanley.
According to the brokerage’s AlphaWise team, there appears to be a correlation between Google searches of a particular property and its mass market share.
“We have analyzed historical Google search data to understand each Macau property’s popularity, particularly among mass market customers,” explained MS.
The brokerage notes that Google searches for Wynn’s Macau properties have recently surpassed that of Galaxy and Melco Crown’s properties – a potential leading indicator for much higher market share.
“Since Wynn Palace’s opening, Google searches for WYNN’s Macau properties have increased to 12-13 / month (a number that is part of their own Google search index), surpassing those of both MPEL and Galaxy. While WYNN’s mass market share has increased from 8 percent to 10 percent in 16Q4, it is still far below MPEL and Galaxy’s of ~18 percent, suggesting potential upside,” said Morgan Stanley.
Market fundamentals are also supportive of Wynn, says MS, noting that VIP revenue grew 13 percent in 16Q4 as opposed to 7 percent for mass.
Furthermore, an increase in overnight visitors, new supply driving demand and the potential of more Chinese visitors coming to Macau are also contributing to optimism for the property.
Looking at the performance of Wynn’s first property, the brokerage notes that while Wynn Macau’s ramp up was slow to begin, the property saw a large increase in market share after the first four quarters of operation.
“Wynn also has a history of outperforming following weak openings, beating consensus for 6 quarters after its initial Macau opening miss,” said the brokerage.