Tags: Wynn | Resorts | China | WYNN

Wynn Resorts a Bet on China Expansion, Las Vegas Rebirth

By    |   Monday, 21 May 2012 11:40 AM EDT

Wynn Resorts (WYNN) seems to be a solid bet on recovery, if you make two assumptions. First, that its Chinese operations can profitably continue an expansion in the special district of Macau, and that Las Vegas as a destination can get up off the ropes and experience a rebirth of the steady convention business that drives its bottom line.

Wynn Resorts owns and operates two destination casino resorts: In Las Vegas, the Wynn Las Vegas, which includes Encore at Wynn Las Vegas; and in the Macau Special Administrative Region of the People’s Republic of China, the Wynn Macau, which includes Encore at Wynn Macau.

The Las Vegas properties offer approximately 4,750 hotel rooms and suites, 220 table games, 2,430 slot machines and a poker room in approximately 186,000 square feet of casino gaming space, including a sky casino and private gaming salons, casual and fine dining in 35 food and beverage outlets, two spas and salons, lounges, and approximately 97,000 square feet of retail space.

In addition, the Las Vegas operations offer three nightclubs, a beach club, a Ferrari and Maserati automobile dealership, wedding chapels, an 18-hole golf course, approximately 283,000 square feet of meeting space, a specially designed theater presenting a water-based theatrical production, and an Encore Theater presenting headliner entertainment acts.

Wynn Macau opened on Sept. 6, 2006, expanding in 2010 to include Encore at Wynn Macau. It features approximately 1,008 hotel rooms and suites, 486 table games, 930 slot machines and a poker pit in approximately 265,000 square feet of casino gaming space, including a sky casino and private gaming salons, casual and fine dining in eight restaurants, two spas and a salon, lounges, meeting facilities and approximately 54,200 square feet of retail space.

The Macau operations includes a show in the rotunda featuring a Chinese zodiac-inspired ceiling and interchangeable gold “prosperity tree” and “dragon of fortune” attractions.

“In January 2011, we completed a refurbishment and upgrade to the resort rooms at Wynn Las Vegas. A remodel of the suites was completed in early May 2011. These remodels were completed at a cost of $61 million,” management said in a recent filing.

In addition, “in 2011, we formally accepted the terms and conditions of a draft land concession contract from the Macau government for approximately 51 acres of land in the Cotai area of Macau,” management reported.

“Following government approval, we anticipate constructing on this site a full-scale integrated resort containing a casino, approximately 2,000 hotel suites, convention, retail, entertainment and food and beverage offerings. We continue to finalize the project scope, timeline and budget.”

Wynn Resorts has a market cap of $10.25 billion in a sector, hotels, restaurants and leisure, where the average company size is $6.01 billion. Its trailing 12-month P/E ratio is 21.55 and its five-year projected price-to-earnings-growth (PEG) ratio is 1.51, compared to 1.73 for the sector.

Its projected earnings per share growth for the coming year is 17.05 percent, compared to a sector average of 20.33 percent.

Game on

Analysts are broadly positive on Wynn Resorts, with buy or outperform calls in from UBS, Credit Suisse, Standard & Poor’s, Deutsche Bank, Jefferies and Needham & Co.

“We see WYNN's results benefiting from strength in its Macau operations, which accounted for over 70 percent of 2011 total property EBITDA,” S&P said in a recent report on the stock.

“We also expect improving Las Vegas Strip fundamentals as higher-margin convention visitation likely picks up, its relatively affluent customer base continues to spend, and hotel room supply growth slows markedly after large increases in 2008 and 2009.”

Wynn Resorts next reports on Aug. 6.

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Monday, 21 May 2012 11:40 AM
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