According to analysts, Wynn Macau should be cautious despite its strong financial position.
Macau.- Despite reporting a strong liquidity profile and high cash balance, Macau casino operator Wynn Macau should not resume dividend payments too quickly because it would be highly credit negative, analysts say.
According to a report from Singapore-based research firm Lucror Analytics, Wynn Macau’s current financial situation should support the casino operator through the Covid-19 crisis, but it should “remain cautious”.
Lucror Analytics said it considered there were risks associated with Wynn Macau’s ownership by Wynn Resorts given the Macau unit’s “history of paying large dividends to the parent company”. US-based Wynn Resorts owns a 72 per cent stake in Wynn Macau.
Analyst Leonard Law wrote: “Our fundamental credit bias on Wynn Macau [Ltd] is ‘negative’, on account of its weakened earnings. We expect the company’s financial profile to deteriorate materially in fiscal-year 2020, before recovering slightly in fiscal-year 2021.
“We foresee fourth-quarter revenues will recover to 45 per cent of pre-pandemic levels, which should allow the company to generate slight positive EBITDA.
“Assuming a zero-revenue scenario, the company will incur operating losses of US$2 million per day, or circa US$60 million per month, Still, Wynn Macau has sufficient cash balance to withstand 24 months of cash burn with zero revenue, after accounting for capex and interest.”
Wynn Macau runs the Wynn Macau complex on the city’s peninsula and the Wynn Palace casino resort in the Cotai district.