Bernstein assesses Wynn Macau status

Wynn Macau is performing better than expected, Bernstein says.
Wynn Macau is performing better than expected, Bernstein says.

According to the financial services firm Bernstein, Wynn Macau shares have suffered the most from the US-China trade war.

Macau.- The US-China trade war has hit the gaming segment hard and companies are concerned about their future. That’s why Bernstein released a comment on Wynn Macau’s status amid this context.

“Wynn Macau has always been perceived by investors as overly exposed to VIP due to its product positioning. As such, among Macau gaming stocks, Wynn Macau’s shares are usually more volatile and heavily impacted by news flow that is favourable or unfavourable to the VIP segment,” Bernstein explained. “Accordingly, Wynn Macau’s shares have suffered the most since U.S.-China trade tensions heightened beginning in mid-2018.”

Still, Bernstein said that the VIP GGR decline environment isn’t as negative as the market thinks. They assured it overemphasised on Wynn’s premium/luxury positioning but neglected its strong position in the fast-growing Premium Mass sector. Also, overlooking its operation and marketing possibilities, strong brand, and the potential growth opportunities at Wynn Palace.

“Based on the history of trading in these stocks, the risk/reward skew is now grossly unbalanced with strong favorability to upside potential,” said the brokerage. 

In conclusion, Bernstein rated Wynn Macau as “Outperform” and put the company’s stock trading below -1 standard deviation historical average.

Casino revenue

The Gaming Inspection and Coordination Bureau of Macau (DICJ) announced on Sunday that gambling revenue in the city decreased 8.6% in August. The industry was hit by a reduction in demand from high rollers after slowing economic growth due to a trade war between China and the United States.

Revenue during last month’s operations was €2.73 billion, slightly lower than July’s €2.74 billion but below analysts’ expectations of a drop between 2% and 6%.

The DICJ also explained that, although expected, protests in Hong Kong contributed to the bad results in August. However, they were not as impactful as they could have been in August.

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