Wynn Resorts is a holding company. Co. is a developer, owner and operator of destination casino resorts. As of Dec 31 2013, Co. owned and operated two destination casino operations: Encore at Wynn Las Vegas, which had 4,748 hotel rooms and suites, 230 table games, 1,854 slot machines, a race and sports book and a poker room, 34 food and beverage outlets, two spas and salons, lounges, and retail space, as well as nightclubs, a beach club, wedding chapels, and an 18-hole golf course; and Encore at Wynn Macau, which had 1,008 hotel rooms and suites, 493 table games, 866 slot machines and a poker pit, eight restaurants, two spas and a salon, lounges, meeting facilities and retail space.
WYNN’s moat is driven by both its established brand and gaming assets in Macau. Wynn is synonymous with high quality. Bellagio and Mirage in Las Vegas are examples of this quality. Government control will keep WYNN’s moat at risk. While unlikely, the Macau/Chinese government could award additional gaming licenses that would increase market competition. There is always a risk that the Macau and Chinese government could exercise its right to seize and take control of all operations on the island, which would obviously meaningfully affect the economic profit outlook of Wynn Resorts.
WYNNS’s stock is under pressure due to deteriorating operating conditions in the company's sole international market, Macau, China. Casino companies there have felt the pinch of a corruption crackdown on the mainland that has sapped gaming demand, but Wynn has been hit especially hard. There are rumors that the Chinese government is looking to implement restrictions on annual tourist levels from the mainland. To make matters worse, the impending opening of competing properties appears to be coming at a most inopportune time. WYNN’s financial position is strong with a cash hoard, at $2.4 billion. We like the company's long-term prospects, and the current downturn in Macau provides investors with a good entry point.
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Positioned to participate in the long-term growth of Macau
Focus on high-end luxury target market
WYNN's VIP focus makes it more sensitive to market conditions
May lose market share to Cotai Strip casions until 2016 when WYNNS can compete
Macau and Chinese government are transitioning toward a nongaming full-resort destination
Expansion in Macau with opening of Cotai property in 2016.
One of six casino licenses in China
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