Wynn Macau Earnings: Market Share Drop Is Seasonal; Long-Term Value Remains Intact

Narrow-moat Wynn Macau’s second-quarter performance was slightly below our and the market’s expectations, with market share in gross gaming revenue falling to 12.5% from 14.2% a quarter ago. Management attributed this to seasonal fluctuation of market shares, owing to disciplined promotional efforts and reinvestment spending in the quarter, while it sees a nice rebound in GGR market share in July, supported by strong mass table drop volume and 99% hotel occupancy. We expect the firm to continue to balance its sales growth and capital expenditure according to market conditions, but its long-term growth and profitability outlook remain intact. While we cut our 2024 revenue forecast slightly by 3%, this is offset by lower operating expenses, and our adjusted EBITDA forecast is largely unchanged. We maintain our fair value estimate of HKD 8.80 per share and think shares are undervalued currently.