WYNN MACAU(01128)2024-09-02 10:30Financial Performance - Entertainment revenue for the first half of 2024 reached HKD 12,089,797 thousand, a significant increase from HKD 8,271,795 thousand in the same period of 2023[5] - Adjusted EBITDA for the first half of 2024 was HKD 4,352,599 thousand, compared to HKD 2,764,152 thousand in the first half of 2023[5] - Net profit attributable to owners for the first half of 2024 was HKD 1,592,122 thousand, a substantial increase from HKD 87,467 thousand in the same period of 2023[5] - Basic earnings per share for the first half of 2024 were HKD 0.30, compared to HKD 0.02 in the first half of 2023[5] - Total operating revenue increased by 37.2% from HKD 10.74 billion in the first half of 2023 to HKD 14.73 billion in the first half of 2024, driven by increased gaming volume and restaurant traffic[34] - Casino revenue rose from HKD 8.27 billion (77.0% of total operating revenue) in the first half of 2023 to HKD 12.09 billion (82.1% of total operating revenue) in the first half of 2024, primarily due to increased gaming volume[35] - VIP table games revenue increased by 15.4% from HKD 2.20 billion in the first half of 2023 to HKD 2.53 billion in the first half of 2024, with VIP table games turnover rising by 20.3% from HKD 61.69 billion to HKD 74.18 billion[35] - Mass market table games revenue grew by 52.5% from HKD 7.46 billion in the first half of 2023 to HKD 11.37 billion in the first half of 2024, with mass market table games turnover increasing by 38.5% from HKD 38.42 billion to HKD 53.23 billion[35] - Slot machine revenue increased by 28.0% from HKD 664.2 million in the first half of 2023 to HKD 850.3 million in the first half of 2024, with slot machine turnover rising by 30.7% from HKD 16.58 billion to HKD 21.67 billion[35] - Non-casino revenue (including rooms, food and beverage, and retail and other) increased by 7.2% from HKD 2.47 billion (23.0% of total operating revenue) in the first half of 2023 to HKD 2.64 billion (17.9% of total operating revenue) in the first half of 2024[37] - Room revenue increased by 7.6% from HKD 1.14 billion in the first half of 2023 to HKD 1.22 billion in the first half of 2024, driven by higher occupancy rates and average daily rates at Wynn Palace and Wynn Macau[37] - Food and beverage revenue grew by 32.0% from HKD 609.6 million in the first half of 2023 to HKD 804.9 million in the first half of 2024, due to increased restaurant traffic and average check amounts at Wynn Palace and Wynn Macau[39] - Retail and other revenue decreased by 14.5% from HKD 720.0 million in the first half of 2023 to HKD 615.6 million in the first half of 2024, primarily due to a decline in retail sales[39] - Gaming tax and premium increased by 41.3% from HKD 4.39 billion in the first half of 2023 to HKD 6.21 billion in the first half of 2024, driven by higher casino revenue[40] - Total operating costs and expenses rose by 25.6% from HKD 9.41 billion in the first half of 2023 to HKD 11.82 billion in the first half of 2024[42] - Financing income increased by 43.3% from HKD 226.2 million in the first half of 2023 to HKD 324.2 million in the first half of 2024, due to higher average cash and investment balances[43] - Net profit attributable to the company's owners surged to HKD 1.59 billion in the first half of 2024, compared to HKD 87.5 million in the same period of 2023[47] - Cash and cash equivalents, along with investment balances, stood at HKD 10.8 billion and HKD 3.9 billion respectively as of June 30, 2024[48] - The company repaid approximately HKD 312.1 million of the WM Cayman II revolving credit facility on July 31, 2024[48] - Capital gearing ratio improved slightly to 152.7% as of June 30, 2024, compared to 155.8% at the end of 2023[50] - Net cash from operating activities increased to HKD 3.805 billion in the first half of 2024, up from HKD 3.0323 billion in the same period of 2023[53] - Cash and cash equivalents at the end of June 2024 amounted to HKD 10.7978 billion, compared to HKD 12.6717 billion at the end of June 2023[53] - The company declared a cash dividend of HKD 0.075 per share for the year ended December 31, 2023, totaling HKD 393.7 million[48] - Net cash generated from operating activities increased to HKD 3.81 billion for the six months ended June 30, 2024, compared to HKD 3.03 billion for the same period in 2023, driven by higher operating profit and changes in working capital[54] - Operating profit for the six months ended June 30, 2024, was HKD 2.91 billion, up from HKD 1.33 billion in the same period in 2023[54] - Net cash generated from investing activities was HKD 1.15 billion for the six months ended June 30, 2024, compared to a net cash outflow of HKD 869.1 million in the same period in 2023, primarily due to investment maturities and interest received[56] - Net cash used in financing activities was HKD 4.45 billion for the six months ended June 30, 2024, compared to net cash generated of HKD 3.07 billion in the same period in 2023, mainly due to debt repayments and interest payments[57] - Total interest-bearing borrowings decreased to HKD 50.28 billion as of June 30, 2024, from HKD 52.68 billion as of December 31, 2023[58] - WM Cayman II revolving credit facility has a total available amount of HKD 11.7 billion, with an option to increase by an additional USD 1.0 billion (approximately HKD 7.81 billion) under certain conditions[59] - As of June 30, 2024, the company had approximately HKD 2.44 billion available under the WM Cayman II revolving credit facility[60] - The company repaid approximately HKD 312.1 million of outstanding borrowings under the WM Cayman II revolving credit facility as of July 31, 2024[60] - WML 2024 notes and WML 2027 notes are set to mature on October 1, 2024, and October 1, 2027, respectively[61] - WML 2029 notes, issued on December 17, 2019, are set to mature on December 15, 2029[61] - WML issued WML 2026 and WML 2028 notes, with interest payments starting from January 15, 2021, and February 26, 2021, respectively, and maturing on January 15, 2026, and August 26, 2028[62] - WML used the net proceeds from the WML 2026 and WML 2028 notes to repay Wynn Macau credit facilities and for general corporate purposes[62] - WML completed the issuance of 4.69 billion) 4.50% convertible bonds due 2029 on March 7, 2023, with net proceeds of 4.60 billion)[65] - The WML convertible bonds can be converted into approximately 459,774,985 shares at an initial conversion price of HK500 million (approximately HKD 3.9 billion), which expired on June 14, 2024, with no outstanding borrowings at maturity[71] - The company expects to fund operations and capital expenditures through operating cash flow, cash on hand, and available credit facilities, but cannot guarantee sufficient cash flow for these purposes[74] - The company may need to refinance debt at maturity or seek additional financing for unforeseen events or new business developments[74] - The company continues to invest in upgrading and renovating its resorts to meet market demand and customer preferences, incurring related capital expenditures[74] - The company’s financial performance is highly sensitive to macroeconomic conditions, particularly in Macau and surrounding regions, which could impact discretionary spending and demand for luxury facilities[77] - Negative macroeconomic factors, such as inflation, rising interest rates, and economic slowdowns, could adversely affect the company’s gaming revenue, financial condition, and cash flows[77] - The company’s reliance on customers from Mainland China, Hong Kong, and Taiwan makes it particularly vulnerable to economic downturns in these regions[77] - The company has no material off-balance sheet arrangements other than the WML convertible bond derivative[73] - The company's operations in Macau are subject to strict regulatory compliance, and failure to maintain necessary licenses and approvals could severely impact its business[79] - Geopolitical tensions, visa restrictions, and currency remittance policies may negatively affect visitor numbers and spending at the company's properties, particularly from mainland China, Hong Kong, and Taiwan[80] - Ongoing investigations, lawsuits, and disputes could divert management attention, harm the company's reputation, and lead to additional regulatory scrutiny[82] - The company relies heavily on retaining key management and skilled employees, and failure to do so could significantly impact its operations and financial performance[82] - The company's business is highly susceptible to factors such as terrorism, infectious disease outbreaks, regional political events, and disruptions in air travel, which have historically and may continue to negatively impact visitor numbers to its resorts, significantly affecting its financial performance and cash flow[83] - COVID-19 pandemic led to a sharp decline in visitor numbers to the company's properties due to travel restrictions and quarantine measures, with some restrictions remaining in place until early 2023, and the company cannot predict when or if operations will return to pre-pandemic levels[83] - The company's cash flow is entirely dependent on its Macau operations, making it more vulnerable to risks such as changes in local economic and competitive conditions, government regulations, and restrictions on visitors from Mainland China, Hong Kong, and Taiwan[85] - The company faces intense competition in the Macau gaming and hospitality industry, with six major operators and 30 casinos as of June 30, 2024, and potential new entrants could further intensify competition, negatively impacting its business and financial performance[89] - The company relies on high-end customers for a significant portion of its gaming revenue, but it may not be able to recover all gaming receivables from credit customers due to legal limitations in enforcing gaming debts across different jurisdictions[89] - Macau's gaming tax is calculated as a percentage of gross gaming revenue (GGR), including the face value of credit instruments issued, and does not deduct uncollectible gaming debts[90] - Non-compliance with anti-money laundering (AML) laws, anti-bribery laws, and other anti-corruption regulations could adversely affect the company's business, performance, and financial condition[90] - The company faces significant compliance risks due to evolving and complex legal and regulatory requirements, leading to increased administrative and general expenses[93] - The company relies heavily on IT systems and third-party data services, exposing it to cybersecurity risks such as data breaches, system failures, and malicious attacks[94] - The company's reputation and brand value are critical assets, and any adverse events or negative publicity could harm its financial performance[92] - The company is subject to strict regulatory scrutiny in the gaming industry, and any failure to comply with regulations could result in investigations, penalties, and legal actions[92] - The company's internal controls and compliance programs may not always prevent violations of laws or company policies by employees, contractors, or affiliates[92] - The company faces increasing scrutiny on environmental, social, and governance (ESG) activities, and failure to act responsibly in areas like sustainability and diversity could damage its reputation[92] - The company's third-party information system providers face similar cybersecurity risks, and the company has limited control over their security operations[94] - The cost of maintaining and upgrading cybersecurity measures is significant, and the company's insurance coverage may not fully protect against cybersecurity-related claims and liabilities[94] - The company has experienced data security incidents in the past and expects more in the future, though these have not yet significantly impacted business operations, financial performance, or financial condition[96] - Any future unauthorized disclosure of personal data could harm the company's reputation, lead to legal actions, fines, and penalties, and negatively affect business operations and financial performance[96] - The company may need to increase investments in data and infrastructure protection, including upgrading systems, hiring additional personnel, and conducting employee training to mitigate future cybersecurity risks[96] - Non-compliance with privacy laws or data security standards could result in reputational damage, fines, litigation, and restrictions on data usage, potentially increasing operational costs[96] - The company relies heavily on computer systems for transaction processing, financial reporting, and employee management, and any significant disruption could have a material adverse effect on business operations and financial performance[97] - Fraudulent activities, including counterfeit chips and theft, could lead to financial losses and damage the company's reputation, despite existing security measures[98] - Fraudulent online gambling and investment websites targeting mainland Chinese citizens could harm the company's reputation and business, as these sites often misuse the company's trademarks and branding[100] - The company does not offer online gambling or investment accounts and is not responsible for unauthorized websites using its name or trademarks[100] - Efforts to shut down fraudulent websites through legal actions or reporting to authorities may be costly and not always successful in protecting intellectual property assets[100] - The company faces risks related to the potential termination of the "WYNN" trademark license, which could severely disrupt its business and negatively impact its financial condition and operating performance[101] - The company's Macau operations are exposed to significant political, economic, and social risks, including potential fiscal downturns, international relations, and civil unrest, which could reduce demand for casino resorts and increase tax and foreign exchange control risks[103] - Macau's smoking control laws, which restrict smoking to designated areas within casinos, may reduce the number of smoking customers and negatively impact the company's business, financial condition, operating performance, and cash flow[103] - Extreme weather conditions, such as typhoons and heavy rainfall, could adversely affect the company's Macau operations by disrupting customer travel and causing property closures[104] - The Macau government has the right to terminate the company's gaming concession without compensation if the company fails to comply with the concession contract or applicable Macau laws, which would have a significant adverse impact on its business and financial condition[105] - The company is exposed to foreign exchange risk due to the potential fluctuation of the Hong Kong dollar and Macau pataca against the US dollar, which could negatively impact its operating performance, financial condition, and debt repayment ability[106][108] - Currency exchange controls and restrictions on currency outflows, such as those currently in place for the Chinese yuan, could hinder the growth of Macau's gaming industry and negatively impact the company's Macau operations[109] - WRL holds approximately 72% of the company's shares as of June 30, 2024, and potential conflicts of interest may arise due to overlapping directors and officers between the company and WRL[110] - The company is approved to operate a total of 570 gaming tables and 1,100 gaming machines in Macau, with 304 tables at Wynn Palace and 258 tables at Wynn Macau as of June 30, 2024[111] - The company faces high leverage risks, with future cash flows potentially insufficient to meet obligations, and may struggle to secure additional financing[112] - The company is exposed to interest rate risks related to floating-rate credit facilities and plans to manage this through a mix of long-term fixed and floating-rate borrowings, along with hedging activities[114] - The company's WM Cayman II revolving credit facility is subject to interest rates based on the Secured Overnight Financing Rate (SOFR) or Hong Kong Interbank Offered Rate (HIBOR), plus a margin, and may face challenges if these rates cannot be determined[114] - Ms. Chen has over 30 years of industry experience, having played a key role in the successful opening and operation of Wynn Las Vegas, Wynn Macau, and Wynn Palace, and was responsible for establishing Wynn International Marketing, Ltd.[118] - Mr. Luo Weixin, appointed as the company's Executive Director since August 11, 2022, has over 25 years of experience in the hotel and gaming industry