As small as Macau is, it’s already turning into a regional affair. The Cotai Strip is acting completely differently from the Macau Peninsula. and it’s having a big impact on the fortunes of the gaming operators there.
When reported earnings this morning, investors expected to see more of the same. Results generally held true to form, with VIP table game volume down 1.6% and mass market volume up 8.5% in the second quarter. That’s a nice increase in the mass market but isn’t anywhere near what Las Vegas Sands Corp. (NYSE:LVS) is doing on Cotai.
Overall, Wynn Resorts, Limited (NASDAQ:WYNN) is pretty much holding steady in Macau until its new resort opens on Cotai in early 2016. Revenue was up 2.6% to $930.9 million, property EBITDA was down 4% to $290.1 million, and adjusted net income rose 10% to $152.9 million, or $1.51 per share. That’s fairly strong, because holding steady or slight increases in revenue and EBITDA is about all investors can expect until its Cotai resort is ready.
The following graphic shows how important Cotai is from a geographic perspective and why Las Vegas Sands’ figures were so much better. Las Vegas Sands Corp. (NYSE:LVS), Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL), and Galaxy have built new resorts there, and they’re all growing quickly on Cotai, sucking the air out of the Macau Peninsula. That won’t change until Wynn Resorts, Limited (NASDAQ:WYNN) and MGM Resorts International (NYSE:MGM) complete resorts there. You can think of it as downtown Las Vegas versus The Strip in the late 1980s.
Beyond Macau
Las Vegas was a lot better for Wynn Resorts, Limited (NASDAQ:WYNN), but it was affected heavily by luck. Net revenue rose 16.2% to $401.4 million, and EBITDA was up 65.6% to $135.7 million, but table game drop fell 4.8%, showing slowing gaming volume. The big revenue increase was due to a comparison to a very unlucky quarter in 2012.
Beyond gaming, non-casino revenue was up 3.9% to $302.1 million, and since non-casino revenue accounts for three-fourths of Wynn Resorts, Limited (NASDAQ:WYNN)’s Las Vegas revenue, this bodes well for the long-term picture.
Foolish bottom line
Like Las Vegas Sands, Wynn’s results fell short of expectations, but the two companies are on two different paths. Las Vegas Sands and Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) will continue to grow and take share as Cotai develops critical mass, while Wynn Resorts, Limited (NASDAQ:WYNN) and MGM Resorts International (NYSE:MGM) just hope to hold steady until their Cotai resorts are complete.
For investors (like me), the hope is that revenue and EBITDA will double when the Cotai resort opens, but it’s a long wait until that happens. Until then, even mild growth is a slight positive for Wynn Resorts, and that’s what we got in the second quarter.
The article Wynn Resorts Stuck Waiting for Cotai Resort originally appeared on Fool.com is written by Travis Hoium.
Fool contributor Travis Hoium manages an account that owns shares of Wynn Resorts. The Motley Fool has no position in any of the stocks mentioned.
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