WYNN Las Vegas has also been performing well, generating $586.8 million in revenue and $231.6 million in EBITDA. May's Golden Week performance is further evidence of robust underlying demand, with overall mass table drop being nearly 10% higher, direct VIP turnover being more than twice as high, and retail sales being 36% higher than the previous May. The management's comments about Macau are also very promising, with the number of daily mass drops having increased in April, direct VIP business having increased significantly, and occupancy and retail sales being in excellent shape. Given the still-early stage of the recovery, this is the level at which Wynn Macau was operating in 20, and it suggests that EBITDA might exceed previous heights. By extrapolating WYNN's current 14% market share, applying the same GGR to revenue conversion, and assuming an EBITDA margin in the high 20s, we arrive at an estimate of $700-800 million (50-60% higher than WYNN consolidated FY22 EBITDA). According to the information provided by management, the annual run rate of Macau GGR is now $22 billion. But what's more important is that the momentum from March and April has carried over into May in both Macau and Las Vegas. It's important to remember that the recovery in Macau only began a few months ago when it reaches full speed, WYNN's margins should expand even further. Notably, WYNN's operating leverage is strong, as evidenced by the 57 point gap between revenue growth and expenses growth that accompanied the recovery. Tenant retail sales were also up 60% from 1Q19 levels, contributing to RevPAR at 95% of 1Q19 levels in the non-gaming sector. The WYNN metrics are on the uptick, with the mass table drop in 1Q23 reaching 82% of 1Q19 levels as just one example. The possibility of multiples reverting to pre-covid averages also further enhances the investment return potential in my opinion. What has changed since my post in February is that valuation is now a lot cheaper at 10x forward EBITDA (it was 13x back then). The focus continues to be that Macau recovery is still in its infancy, and the share price still below March 2021 levels. Looking ahead, I continue to view WYNN as a fantastic way to get in on the recovery theme in China and Macau. Recapping the 1Q23 results, performance has been flawless across Macau, Las Vegas, and at Encore Boston Harbor, with property level EBITDAR of $430 million. I reiterate my buy rating for Wynn Resorts ( NASDAQ: WYNN) with a more positive view on recovery in Macau.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |