Normally a combination of words like, Wynn resorts, Macau gambling, earnings down, would set the alarm bells running and local investors eyeing PBL shares nervously. There is a strong PBL factor in the news but investors can hold those selling fingers and read on.

Wynn’s third quarter results do show a sharp fall in earnings from a year ago, but that’s because of the absence of a deal this year like the one 12 months ago when Wynn sold the sub-lease on a casino site in Macau to PBL Melco for more than $US900 million. That was a deal Wynn boss, Steve Wynn, is reported to have told his senior managers was the best he had ever done.

Wynn didn’t own the site, just the sub-lease or licence to develop a casino. PBL and its Macau partner in Melco snapped it up for its third casino and Wynn banked the money. That’s why when Wynn issued its third quarter results yesterday profit plunged 94% on a year ago.

Wynn said third-quarter net income dropped to $US44.7 million from $715.7 million. Revenue almost doubled to $US702.1 million. Wynn shares are up 79% so far this year, PBL shares are up around 12%. And Wynn says it is actively pushing its development plans for the Cotai casino site in Macau.

The company said it has applied for a “concession of land” for the area at Cotai. That will be Wynn’s second casino in the city, if granted. That’s bad news for PBL Melco. So the company sells Melco an unwanted site and then moves to get its hands on what it says is a better site for a new stand alone project, while continuing to expand its existing Wynn Macau operations.

The quarterly report shows the Wynn Macau had net revenues of $US347 million in the three months and its high rollers rooms turned over $US9.8 billion. Incredible figures! The final stage of this casino will open by the end of the year.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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