Majestic Research

Bloomberg

Wynn Has Second-Quarter Profit on New Macau Casino

By Oliver Staley and Danny King
Published: August 06, 2007

Wynn Resorts Ltd. reported second- quarter profit and revenue that exceeded analysts’ estimates after it opened a new casino in Macau, China, and drew more gamblers to Las Vegas.

The shares rose 8.6 percent in extended trading today.

Net income was $89.6 million, or 82 cents a share, compared with analysts’ estimates of 52 cents. Revenue more than doubled to $687.5 million, beating estimates by more than $100 million.

Wynn Resorts’ Macau casino contributed 42 percent of operating income. It opened in September in the only region in China where gambling is legal. Wynn Las Vegas almost tripled its operating profit by drawing more gamblers and filling more of its $300-a-night hotel rooms with overnight guests.

“Macau is potentially one of the best markets to ever open up,” said Matthew Jacob, an analyst with Majestic Research in New York. “The new entrants to the market like Wynn have been able to provide a much better gaming product.”

A year earlier, Wynn Resorts had a loss of $20.1 million, or 20 cents a share. It was founded by billionaire Steve Wynn.

The company increased its estimate for costs to build a new resort in Las Vegas called Encore, which is slated to open in early 2009. Spending on the project may total $2.2 billion, compared with an earlier estimate of about $1.7 billion.

Shares of Wynn Resorts jumped $9.26 to $116.65 at 5:15 p.m. New York time after gaining $6.33 to $107.39 in Nasdaq Stock Market composite trading. Before earnings were released, the shares had risen 42 percent since the Wynn Macau opened.

Analyst Estimates

Analysts had estimated second-quarter profit of 52 cents a share, the average of six projections compiled by Bloomberg. Sales were predicted to be $566.6 million.

Wynn Las Vegas reported operating profit of $63.4 million. Operating income at Wynn Macau was $53.2 million, the company said today in a statement.

Wynn Resorts plans to continue expanding in Macau, with a 123,000-square-foot addition planned for its current property. Wynn Resorts has development rights to 54 acres on Macau’s Cotai Strip, where it may build as many as three casinos in the next five years.

Gaming revenue in Macau has surged since 2004, when the government ended the four-decade monopoly of billionaire Stanley Ho by awarding licenses to companies including Las Vegas Sands Corp. and Wynn Resorts. Total gambling revenue rose 50 percent in Macau during the second quarter.

Steve Wynn, 65, had a net worth of $3.4 billion as of March, ranking him 264th among the world’s billionaires according to Forbes magazine. He took Wynn Resorts public in 2002 and opened the Wynn Las Vegas in 2005. He owns about a quarter of the company.