BAML bullish on Macau following Wynn Palace opening

Investment bank Bank of America Merrill Lynch has turned bullish towards Macau’s gaming sector as Wynn Palace opens for business this month, financial media Barron’s Asia reports.

Mass gaming alone should be able to carry the sector’s earnings back to recovery in the second-half of this year, said Bank of America Merrill Lynch’s Billy Ng.

According to BAML, mass and slots gaming have already taken more than half of 16Q2 gross gaming revenue. With each 1 percentage point switch from VIP to mass gaming, this should translate into an extra $80 million in operating profits as a result of a 30 percent margin difference between the two segments, said the bank.

“We expect that the switch is likely to continue in 2H. We estimate that VIP will account for less than 15 percent of EBITDA in 2H,” wrote Ng.

On Monday, Macau saw its most expensive casino to date open its doors. Wynn Palace will include a 1,700-room hotel, a performance lake, and a wide range of amenities including meeting, retail, food and beverage, and casino spaces. It is said to be aimed at high-end and premium mass players.