Macau's Wynn Palace Will Be A Game Changer

Despite Wynn Resorts, Limited WYNN being the “best share price performer” year to date, Citi’s Anil Daswani believes that there still is plenty of upside potential.”

The analyst maintained a Buy rating on the company, while raising the price target from $101 to $117. The analyst also named the stock as Citi’s Top U.S. Large Cap Gaming Pick.

Wynn Palace

“We like the earnings improvement that the new Macau and US properties will likely bring to Wynn, yet the 0.59 ex-cash PEG at Wynn Resorts suggests the earnings impact is being mispriced,” Daswani mentioned.

Daswani expects Wynn Resorts’ gearing to improve gradually to the industry norm, following the opening of Wynn Palace in 3Q.

In fact, the analyst estimated Wynn Palace’s EBITDA at R129 million in 2016, which reflects expectations of the facility opening in mid-August. For its first full year of operations, in 2017, Wynn Palace is expected to generate EBITDA of $594 million, growing to $687 million in 2018.

Wynn Paradise Park

The company recent announced plans to spend $1.6 billion to convert its Las Vegas golf club into a resort, which has tentatively been named Paradise Park.

“We forecast Wynn Paradise Park to generate EBITDA of US$258m in its first full year of operations in 2020, implying an ROIC of ~16%,” Daswani stated, while adding, “Given the heavy focus on non-gaming amenities at this project, we anticipate a roughly 20:80 revenue split between gaming and non-gaming.”