[ET Net News Agency, 7 February 2020] HSBC Global Research reduced its target price for
Wynn Macau (01128) to HK$25 from HK$25.7 and maintained its "buy" rating.
The research house said Macau's January gross gaming revenue (GGR) declined 11% to
MOP22.1bn amid the coronavirus outbreak. In the first seven days of the Chinese New Year
period, Chinese visitation was down 83% and both VIP and mass growth could be down by as
much as 50% despite the favourable win rate.
Factoring in the newly announced 15-day closure of all gaming operations and assuming
the daily run rate will come in at MOP550m/day (30% below FY2019 average) for the rest of
1Q, 1Q GGR should be down 38%.
HSBC said some investors were worried that the renovation work on the Peninsula last
year, particularly for Encore, could cause short-term disruption. However, the US$125m
renovation work was wrapped up at the end of last year. It believes the product upgrades
can help Wynn gain market share in 2020.
While lower commission could still put the VIP business under some near-term pressure
amid the impact of the outbreak, its premium offering especially post-renovation could
help to defend its market share, HSBC added view. HSBC cut its FY2020-21 EBITDA forecasts
by 15% and 4% due to the new market growth assumptions. (KL)