Trade war to impact on Wynn Macau’s 3Q

Wynn Macau is concerned about the impact of the trade war between US and China.
Wynn Macau is concerned about the impact of the trade war between US and China.

Wynn Resorts revealed that Wynn Macau will suffer in the third quarter from the US-China trade war, which will impact its finances.

Macau.- The US-China trade war continues to worry companies that operate in either market. That’s why Wynn Resorts revealed its Macau results during the third quarter will suffer from it.

The company issued a filing to the Securities and Exchange Commission on Thursday and revealed its projections.

“Consistent with the broader Macau market, we anticipate our Macau Operations’ casino revenues and Adjusted Property EBITDA for the third quarter of 2019 will be negatively impacted by significantly lower VIP gaming turnover resulting from a variety of factors in the region, including the ongoing trade dispute between the U.S. and China and disruptions in Hong Kong SAR,” Wynn Macau said. 

“We expect VIP gaming results to be partially offset by continued growth in mass-market table drop and slot handle.” 

Bernstein’s assessment on Macau

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.

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