Wynn Resorts (NASDAQ:WYNN) recently reported its Q3 2013 earnings, which came out largely on expected lines with 10% y-o-y revenue growth in Macau. The mass-market gaming segment in Macau witnessed a jump of 13.5% while VIP gaming turnover grew by 10%. Las Vegas operations remained flat with 1% increase in revenue and 3% decline in EBITDA as compared to the same period previous year. Wynn had around 600 guestrooms out of service in the quarter for remodeling.  The company is also considering Japan for a casino project in the future. Wynn’s Cotai resort is running on schedule and is expected to open around Chinese New Year in 2016.  With around 1,700 hotel rooms and 500 gaming tables, the Cotai resort will significantly enhance Wynn’s capacity in Macau.
Wynn Sees Steady Growth In Macau
Wynn witnessed a steady quarter in Macau as overall gambling continued to grow in the region. Betting in Macau soared 19% to $11.2 billion for the quarter.  In the previous quarter, Wynn witnessed a decline in VIP gaming turnover. However, this time it saw an uptake of 10% to $30.3 billion.  VIP gaming accounts for more than 50% of the company’s value, according to our estimates. VIP table games win as a percentage of turnover was 3.04%, slightly below the 3.08% experienced in the third quarter of 2012. Mass-market gaming has been growing rapidly in Macau and Wynn is also benefiting from this growth. While there was 8% decline in mass-market drop to $630.7 million from the September 2012 quarter, the segment’s win percentage of 38.0% was higher than 30.8% in last year’s third quarter.  Overall, the company was able to balance its Macau business between volume gain in VIP segment and gain in win percentage in mass-market segment. We continue to believe that the mass-market gaming will drive the future growth for the industry as it provides faster growth and higher margins. It will be interesting to see if Wynn manages to capture higher market share in this segment.
U.S. Operations Remain Flat
According to our estimates, Las Vegas operations contribute more than 13% to Wynn’s value. The company witnessed marginal revenue growth in the region as compared to the third quarter of 2012. While the table games drop remained flat at around $676.3 million, the table games win percentage was 22.6%, higher than 21.9% reported during the same period previous year. Net casino revenues were up 4% to $162 million. Non-casino revenues were $282.7 million, 1% higher than in the third quarter of 2012 due to increases in the hotel and retail segments, and partially offset by lower food and beverage and entertainment revenues.  The company eyes expansion in the U.S. and is competing for licenses to build casino-resorts in Pennsylvania and Massachusetts. If selected, the company plans to invest more than $2 billion in both projects. The management stated that these projects would add an extra $15 million to $20 million EBITDA in the region. 
We currently have $148 price estimate for Wynn Resorts, which we will soon update based on the third quarter earnings announcement.Notes: