Wynn Macau Earnings: Solid First Quarter, with Market Share Gain and Margin Expansion

Narrow-moat Wynn Macau posted a solid first-quarter 2024 performance that highlights a decent market share gain in gross gaming revenue, or GGR, to 14.0% from 13.5% a quarter ago. Adjusted EBITDA margin expanded strongly to 34.0%, up 140 basis points from the prior quarter, hitting a record high. The results were slightly above our expectations, helped by a higher win-rate and disciplined cost management. Nevertheless, we expect costs to rise amid higher reinvestment in both gaming and nongaming segments to boost revenue and defend market share, as competition among Macao casinos is intensifying. As such, we maintain both our earnings forecasts and fair value estimate of HKD 8.80 per share. We think the shares are fairly valued currently, and Sands China remains our preferred pick for the sector due to its focus on the mass market, well-positioned properties with the largest room counts in Macao, and a successful track record in nongaming activities.