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Wynn Resorts Ltd WYNN

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Morningstar’s Analysis

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Economic Moat

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Capital Allocation

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Government Regulators Deal Macao Operators a Good Hand; Las Vegas Sands and Wynn Shares Attractive

Dan Wasiolek Senior Equity Analyst

Analyst Note

| Dan Wasiolek |

Our long-held view that all six existing Macao gaming licenses would be renewed by the June 22 expiration date was confirmed by the Chinese government on Jan. 14, removing an overhang for Las Vegas Sands and Wynn, whose shares were up by low double digits and high single digits, respectively. Additionally, no additional licenses will be awarded, matching our ongoing stance. The gaming licenses will be renewed for a 10-year period (with the possibility for a three-year extension), also in line with our thinking. While operators will need to notify the government of any capital distributions, there is no restriction on the activity (as modeled), which had been a concern in the market. Overall, this supports the regulatory intangible asset advantage--the source of their narrow moats--for Las Vegas Sands and Wynn.

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Company Profile

Business Description

Wynn Resorts operates luxury casinos and resorts. The company was founded in 2002 by Steve Wynn, the former CEO. The company operates four megaresorts: Wynn Macau and Encore in Macao and Wynn Las Vegas and Encore in Las Vegas. Cotai Palace opened in August 2016 in Macao, Encore Boston Harbor in Massachusetts opened June 2019. Additionally, we expect the company to begin construction on a new building next to its existing Macao Palace resort in 2022, which we forecast to open in 2025. The company also operates Wynn Interactive, a digital sports betting and iGaming platform. The company received 76% and 24% of its 2019 prepandemic EBITDA from Macao and Las Vegas, respectively.

Contact
3131 Las Vegas Boulevard South
Las Vegas, NV, 89109
T +1 702 770-7555
Sector Consumer Cyclical
Industry Resorts & Casinos
Most Recent Earnings Sep 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Distressed
Employees 27,500

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