Wynn Macau's property EBITDA plunged 35.5% in 4Q14

The Cotai project has also been delayed.

Wynn Macau reported a 4Q14 property EBITDA of US$241mn (HK$1877 mn), down 35.5% y/y and down 25.9% q/q.

According to a research note from Barclays, the result was lower than Bloomberg consensus by 3% and higher than Barclays' estimate by 3%.

Meanwhile, group revenues were US$761 mn, down 32.0% y/y and down 19.2% q/q. Further, management announced a delay to the Wynn Cotai project due to construction worker permits.

Here's more from Barclays:

By segment:

Mass win negatively impacted by lower hold rate: 4Q14 mass table revenues were down 15.0% y/y and down 23.9% q/q to US$249mn. The hold rate was low at 39.3%, the lowest since 3Q13. Management said the low hold rate in premium mass negatively impacted group EBITDA by US$15-20 mn.

VIP revenues were US$580 mn, down by 42.3% y/y and 16.9% q/q. 4Q14 VIP hold rate was at 2.80%.

Slot revenues were down 20.9% y/y and 23.9% q/q at US$56 mn.

Management said January saw strong mass trends at Wynn: VIP remained soft in VIP but VIP revenues were supported by a hold rate that is higher than usual. Mass however, was strong in January at an impressive +26% y/y increase.

Management noted that this was attributable to strong mid-level mass; as the most high-end mass trends were similar to VIP. Wynn said there were more hotel rooms allocated to mass (from VIP junkets, and also from renovation) that had helped the significant mass growth.

Management noted they have 7000 targeted players under their “Winter Campaign” programme, which so far has been going well.

Pipeline updates:

Cotai property opening delay: Management said Wynn Palace on Cotai is on budget, but will not open according to the original plan to open prior to 2016 Chinese New Year. Official press release still has 1H16 as the target (our projections assumed a mid-2016 opening).

Management said the delay was due to the timing of construction worker permits. In the latest round of permits, they received 700 workers after requesting 1,000 and the approvals came three months late. Wynn said they need a total of 7,000 workers; ie, they need another 1,600-1,700 from upcoming approvals.

We note the shortage of construction workers has been the case both at Wynn Palace and at Sands China’s Parisian. We believe a delay to 2016 projects would mean a better and longer headstart period for 2015 casino openings from Galaxy and Melco (both rated Overweight, and which remains our preferred stocks).