Wynn Resorts (NASDAQ:WYNN) plans to spend about $4 billion on a new resort located on the Cotai strip in Macau.  In May, Wynn received the official approval to begin construction on the new resort. Wynn is trying to strengthen its position in Macau where it presently operates Wynn Macau and Encore.
The new project will be located on the Cotai strip and will have 2,000 rooms, 500 gaming tables and 10 restaurants.  Macau contributes approximately 60% of Wynn’s revenues and according to our estimates, Macau contributes approximately 78% of Wynn’s current valuation.
Macau has unquestionably become the epicenter of the global gaming industry with all prominent gaming companies vying for presence in the region. According to a study by PricewaterhouseCoopers, the Macau gaming market is expected to more than double to $62.2 billion between 2010 and 2015. 
Wynn’s primary competitor, Las Vegas Sands (NYSE:LVS), has a much stronger foothold in Macau and presently operates the Venetian Macao, the Sands Macao and the Four Seasons Hotel. In April, Las Vegas Sands launched the first phase of its new resort on the Cotai strip. (See our previous post: LVS Expands In Macau With Sands Cotai Central)
Wynn’s new project is expected to be fully operational by 2015-2016 and would boost Wynn’s presence in Macau.
We have a $136 price estimate for Wynn Resorts, implying a premium to the market price.Notes: