Wynn Macau's Fourth Quarter Performance: JP Morgan Analysts Highlight Strong EBITDA Margin and Future Dividend Prospects

Analysts from JP Morgan have conducted a comprehensive analysis of Wynn Macau's performance in the fourth quarter of 2023, highlighting several key factors that contributed to its success. In their investment memo following Wynn Resorts' earnings announcement, analysts DS Kim, Mufan Shi, and Selina Li provided detailed insights into the company's financial performance and future prospects.

According to the analysts, Wynn Macau achieved a fourth-quarter EBITDA margin that was near its 10-year highs, primarily due to robust cost control measures and significant growth in the mass market segment. The property's EBITDA rose by an impressive 16 percent quarter-over-quarter to reach $297 million, representing 85 percent of pre-COVID levels. Despite some assistance from favorable VIP luck, the hold-adjusted EBITDA of $290 million exceeded expectations, demonstrating solid operational performance and margin expansion.

One of the standout metrics highlighted by JP Morgan was Wynn Macau's improved EBITDA margin, which reached 32.6 percent, marking a substantial increase of 140 basis points from pre-COVID levels. This improvement was particularly notable considering that operating expenses increased by 4 percent quarter-to-quarter to $2.56 million per day, albeit remaining 14 percent below the levels recorded in the fourth quarter of 2019. Despite this increase in expenses, Wynn Macau managed to achieve a commendable 10 percent growth in revenue during the period.

JP Morgan's analysis also focused on Wynn's gross gaming revenue (GGR) performance, which saw a robust 12 percent increase in the fourth quarter of 2023 compared to the previous quarter. Both the mass and VIP segments experienced similar growth rates, outperforming industry averages. Mass GGR, in particular, increased by 11 percent quarter-to-quarter and surpassed pre-COVID levels by 17 percent, indicating strong demand and resilience in the market.

In addition to discussing financial metrics, JP Morgan provided insights into Wynn Macau's dividend policy and future prospects. While no specific timeline was provided for resuming dividends, the analysts anticipate a potential dividend resumption next year, as fiscal year 2024 dividends are expected to be paid in 2025. However, the timing of dividend resumption is contingent on Macau's leverage profile and overall market conditions.

Overall, JP Morgan's detailed analysis paints a positive picture of Wynn Macau's performance in the fourth quarter of 2023, highlighting its strong operational performance, margin improvement, and resilience in the face of market challenges.

By fLEXI tEAM