Wynn Macau Could Post 2023 EBITDAR of $917M, According to Research Firm

Wynn Resorts’ (NASDAQ: WYNN) Wynn Macau arm could notch 2023 earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs (EBITDAR) of $917 million, well ahead of previous forecasts.

That’s the take of CreditSights, which previously estimated that the base case for the Wynn Palace operator’s 2023 EBITDAR was $632 million, with a bull case of $892 million. The research firm cited “meaningful margin improvements” delivered by the gaming company as catalysts for the bullish EBITDAR revision. In Macau, as well as Wynn Palace.

Wynn’s Macau business continues to benefit from a healthy recovery, which has accelerated on a monthly basis since China lifted its Covid travel restrictions in early January,” observed CreditSights.

Wynn Resorts, the Las Vegas-based parent of the Macau entity, delivered second-quarter results last Wednesday highlighting vibrancyin Macau. But it also noted that its North American properties notched record adjusted property EBITDAR. Those venues are Wynn and Encore Las Vegas, and Encore Boston Harbor.

Should the operator meet or even slightly beat the CreditSights projection of $917 million in 2023 EBITDAR, it will be further affirmation that it’s on track to regain pre-coronavirus pandemic earnings form as soon as next year.

One reason Wynn Macau’s recovery is so impressive is that the operator has nimbly reduced its emphasis on VIPs. That is enabling it to pilfer market share among bettors from rivals. The latter two segments are more margin-efficient.

Additionally, CreditSights highlighted Wynn Macau’s “higher-than-expected business volumes, and improved cost efficiencies” as propellants for potential upside for the operator. There’s more to that story, and it could be good news for the six concessionaires, including Wynn Macau.

In a Monday note to clients, Jefferies analyst Andrew Lee said summertime traffic to Macau from mainland China is rising, and that those tourists are expressing a clear preference for the gaming hub over destinations such as Hong Kong and Taiwan. In the first half of 2023, Macau was the top overseas destination for Chinese tourists, according to China Tourism Academy data.

CreditSights added that Wynn Macau’s leverage could rest at 7.4x by the end of this year, which could be bullish for the operator’s corporate debt.

“Given the trends to date, and our constructive view on the [Macau] region, Wynn Macau Ltd.’s bonds … offer the most attractive yield among the U.S. operators in the region,” added the research firm.

CreditSights pointed out that Wynn Macau has 5.5% bonds maturing in 2026 that currently yield 8.2%, making that debt more attractive than the 5.875% MGM China notes maturing the same year sporting a yield of 7.7%.

Confirming its strong financial position, parent Wynn Resorts said last week it will buy up to $300 million of the $1.78 billion in 5.5% corporate debt it has maturing in August 2025.

“We view Wynn’s cash position as more than adequate to fund the cash tender offer,” concluded CreditSights.

The operator could further firm its balance sheet via cost savings realized by operations in eight states a move announced last Friday.