Wynn Macau Earnings: Revenue Recovery Continues but Loss-Making

Despite a sequential improvement in both revenue and adjusted EBITDA, Wynn Macau’s third-quarter results missed market expectations. We think the weaker-than-expected performance at its peninsula property is the key drag, which is partly due to prolonged renovation closures. In addition, elevated debt coupled with the rising interest rates, has dampened the bottom line and Wynn Macau saw a net loss of USD 6 million in the quarter, compared with net profit of USD 61 million a quarter ago. We lower our 2023-25 net profit forecasts by 5%-21% mainly to incorporate higher financial expense assumptions, with limited tweaks to revenue and adjusted EBITDA. Consequently, we reduce our fair value estimate slightly to HKD 8.80 per share, from HKD 9.20. We think the selloff, with share prices falling sharply by 13% after the earnings release on Nov. 10, is overdone, and the shares are currently undervalued.