Wynn slides as Macau operations weigh on earnings

China’s anti-graft campaign – created to deter high rollers from illegally siphoning off billions of dollars from Mainland China to Macau – is hurting the company’s top line in the process. He’s even said there are things about it that are better than doing business in the United States. “No jurisdiction ever has imposed that kind of logic on us”.

The Macau government has imposed a cap that seeks to limit the increase of live dealer table numbers to 3 percent compound annual expansion until the end of 2022, from a base of 5,485 tables recorded at the end of the fourth quarter in 2012. Steve said the only reason to impose such a policy was to “undermine and scuttle” the gaming industry and the government needed to “intervene and correct this aberration”.

Now the company Insiders own 20.1% of Wynn Resrts Ltd Company shares according to the proxy statements. “Everything from [local workforce job] promotions to the creation of facilities has already taken place, but understand that the reason that these extraordinary non-gaming attractions exist is because the damn casino is the cash register”, he stressed.

“The government wanted us to build highly diversified non- gaming structures. That’s the truth of it. That’s that irrevocable, undeniable, inexorable truth of it. The gaming allows the non-gaming to flourish”.

“Here in America, we would never have a Las Vegas of the diversity we’ve had if the city had told us how many tables we could spread”, said Mr Wynn. You can’t do it with 150 or 250 tables.

In Macau slot machine handle for the third quarter of 2015 declined 42.6% from the 2014 period to $824.6 million, and slot win decreased by 43.0% to $41.9 million. After trading began at $75.65 the stock was seen hitting $77.25 as a peak level and $70.93 as the lowest level. At the same time, net revenues for Las Vegas operations were $411.2 million, a 3.9% decrease from $427.8 million in the same period from the previous year.

To be clear, Macau is still a highly profitable location for Wynn Resorts and all of the other operators there.

Wynn called this turn of events an “aberration”. The government has stepped up the monitoring of debit cards in the territory, placed cameras in VIP rooms, limited the number of tables allotted to new projects, and scared off high-rollers concerned with getting ensnared in President Xi Jinping’s wide reaching anti-corruption drive. “Some of them have gone out of business and I think others will go out of business, which means we have to focus very intensely on the policies that we employ with regard to credit”, he added.

As mentioned above, Wynn Resorts posted a 37.9% decline in net revenue from its Macau-based properties. The company earned $996 million during the quarter, compared to analyst estimates of $1.03 billion.

The downturn was driven by Wynn’s Macau casino, which saw revenue fall 38% to $585m and earnings cut in half to $163m.

The group’s net income on a generally accepted accounting principles (GAAP) basis more than halved to US$73.8mln from US$191.4mln a year ago.

Wynn’s Las Vegas business segment also did not prove to be supportive to the worsening financial position in Macau. The 52-week high of Wynn Resorts, Limited (NASDAQ:WYNN) is $192.45 and the 52-week low is $50.96. Her appointment gives the company’s board a female member. Lower margins are likely for labor-intensive USA companies, and the pie will be divided differently, with different winners and losers in China.