Wynn Macau 60-Cent Dividend for 2018 Follows Cautious Approach by Casino Company

Posted on: April 1, 2019, 09:59h. 

Last updated on: April 1, 2019, 10:48h.

Ed Silverstein @casinoorgedsilv Read More
Expertise: Legal, Tribal Gaming.

Wynn Macau Ltd. plans to pay a 60-cent-per-share final dividend for 2018 — which analysts say is the lowest amount in five years — and suggests that company officials continue to be vigilant when it comes to the company’s future.

Wynn Resorts CEO Matthew Maddox had described a slowdown in the company’s Macau casinos in November, and Wynn Macau Ltd. last week announced the smallest dividend in five years. (Image: Las Vegas Review-Journal)

The dividend — which still needs shareholders’ approval — was announced on Thursday and is slated to be paid on June 19.

In response, JP Morgan Securities (Asia Pacific) analysts said it represents a 100-percent payout for the 2018 fiscal year and falls below the 134 percent paid in the prior year, according to GGR Asia.

Caution was seen among company officials during their last two earnings calls — and likely stems from issues related to capital expenditures, JP Morgan analyst D.S. Kim said in a memo released on Friday.

Starting next year, the company will build over 1,300 hotel rooms on seven acres next to the Wynn Palace on Macau. Also, the Crystal Pavilion, a large glass structure, will be built on the podium level.

This year, the company is enhancing the gaming area at Wynn Macau, adding two restaurants and retail space. It is also upgrading all 410 rooms in the Encore tower, which is also expected to be completed inside of 2019.

Competing Casinos

The company is facing competition from other gaming operators in Macau. There are six gaming operators and 41 casinos on Macau, and several of these may expand.

Across the board, overall revenue and the number of visitors began to improve in Q3 of 2016, and in 2018, visitation increased by 9.8 percent to 35.8 million. Casinos on Macau saw about HK$294.03 billion (US $37.46 billion) in gaming revenue during 2018, an increase of approximately 13.96 percent over 2017’s approximate HK$258.00 billion (US $32.87 billion), “making Macau the largest gaming market in the world,” the company said in its recent financial report.

Last week, Wynn Macau Ltd. reported a net profit of nearly US $796 million for full-year 2018, an increase of about 69 percent over the same period in 2017.

Slowdown at Macau Venues

Wynn Resorts CEO Matthew Maddox in November reported a “slowdown” at the company’s Macau venues.

During the same month, Maddox predicted that Wynn earnings from Macau in the fourth quarter would be 20 percent lower than the general Wall Street consensus. Analysts at Deutsche Bank said Maddox was being “overly conservative.”

Wynn’s continued focus on the VIP sector raised concerns, Credit Suisse analyst Cameron McKnight said. Many casinos have begun focusing more on the mass market demographic.

Following three years of annual gaming win declines between 2014 and 2016, the enclave posted an increase in 2017, and will again this year.

Last November, Wynn Resorts revealed during its Q3 investor call that Paradise Park, a 38-acre project, was abandoned. Maddox told investors that the water park was to have cost the company $10 million to $15 million in lost gaming revenue.

The company reported that net income in the third quarter totaled $156.1 million, or $1.44 per share. That missed Wall Street expectations, which called for earnings of $1.77 per share.

Wynn Resorts earnings fell short of expectations in Q4 of 2018, too, and the company recently settled with the Nevada Gaming Control Board for allegedly violating sexual misconduct regulations, but Maddox nonetheless remains bullish on the casino empire’s future.

Adjusted net income in the final three months of 2018 totaled $114 million, or $1.06 per share. Analysts expected $1.36 per share.

Maddox believes Wynn Resorts’ Encore Boston Harbor will open as scheduled in June.

Wynn Macau Ltd. is traded on the Hong Kong Stock Exchange and is a subsidiary of Wynn Resorts Ltd., which is traded on the Nasdaq.