Financial Performance - Casino revenue for 2024 reached HKD 23,617,908, an increase of 23.1% from HKD 19,111,112 in 2023[10] - Adjusted EBITDA for 2024 was HKD 8,210,137, up 24% from HKD 6,621,025 in 2023[10] - Profit attributable to owners for 2024 was HKD 3,198,178, a significant increase of 172.5% compared to HKD 1,171,656 in 2023[10] - Basic earnings per share for 2024 were HKD 0.61, compared to HKD 0.22 in 2023, reflecting a growth of 177.3%[10] - Total operating revenue increased by 18.4% from HKD 24,268,142 in 2023 to HKD 28,740,421 in 2024[49] - Non-gaming revenue for 2024 was HKD 5.12 billion, accounting for 17.8% of total operating revenue, slightly down from HKD 5.16 billion (21.3%) in 2023[51] - Room revenue for 2024 was HKD 2.37 billion, relatively stable compared to HKD 2.44 billion in 2023[52] - Restaurant revenue increased by 19.1% to HKD 1.61 billion in 2024 from HKD 1.35 billion in 2023, driven by increased foot traffic and average bill amounts[55] - Retail and other revenue decreased by 16.5% to HKD 1.14 billion in 2024 from HKD 1.37 billion in 2023, primarily due to a decline in retail sales[55] - Operating costs increased by 13.8% to HKD 23.41 billion in 2024 from HKD 20.57 billion in 2023[59] - Financing income for 2024 was HKD 568.1 million, nearly unchanged from HKD 571.3 million in 2023[60] - Financing costs decreased by 4.4% to HKD 3.19 billion in 2024 from HKD 3.34 billion in 2023, attributed to lower average loan balances and interest rates[61] - Net profit attributable to the company's owners increased by 173.0% to HKD 3.20 billion in 2024 from HKD 1.17 billion in 2023[64] - The operating profit for 2024 was HKD 5,330.0 million, up from HKD 3,700.0 million in 2023, representing a growth of approximately 44.3%[74] Gaming Operations - WRM has obtained a 10-year gaming license from the Macau government, allowing operations from January 1, 2023, to December 31, 2032, at Wynn Palace and Wynn Macau[19] - WRM is required to pay a special gaming tax of 35% on gross gaming revenue and contribute up to 5% of gross gaming revenue annually for public welfare and infrastructure[22] - The gaming special tax rate is set at 35% of gross gaming revenue, with a special contribution of 5% also applicable[28] - The company adjusts its gaming table and slot machine mix in response to market demand and competition, which may impact profitability[36] - The company has been approved to operate a total of 570 gaming tables and 1,100 gaming machines in Macau[151] - The company has been approved for a total of 303 gaming tables at Wynn Palace and 257 at Wynn Macau, with the table mix subject to change based on market demand[151] - The company faces competition from 28 other casinos in Macau and potential new entrants from regions like Japan and Taiwan[32] - Macau's gaming revenue is projected to increase by 23.9% in 2024, reaching HKD 220.18 billion, up from HKD 177.73 billion in 2023[30] - The number of visitors to Macau is expected to rise by 23.8% in 2024 compared to 2023, indicating a strong recovery in tourism[33] Investment and Development - The total investment commitment by WRM over the 10-year license period is MOP 21.03 billion (approximately HKD 20.42 billion), with MOP 19.80 billion (approximately HKD 19.22 billion) allocated for non-gaming capital projects[27] - WRM must submit annual proposals for investment projects to the Macau government by September 30 each year, detailing investment amounts and timelines[25] - WRM's investment plans include attracting foreign visitors, hosting exhibitions, and promoting cultural and health-related activities[27] - The company plans to release its interim report for the six months ending June 30, 2025, in September 2025[10] - Wynn Palace is in the design phase for its next development stage, which will include a theater and expanded event space[13] Regulatory Compliance - The Macau government has the right to revoke WRM's gaming license if it fails to meet obligations, including national security and public interest requirements[23] - WRM is subject to ongoing supervision by the Macau government and must submit progress reports every two months for investment projects[25] - Any financial decisions exceeding 50% of the company's capital must be notified to the Macau Chief Executive at least five working days in advance[24] - The company must appoint a permanent resident of Macau as an executive director, holding at least 15% of the company's capital[20] - WRM's operations are regulated under strict legal frameworks, requiring compliance with various financial reporting and operational obligations[19] - The company must comply with Macau laws and regulations, and failure to do so may negatively impact its operations[105] - The company is subject to ongoing regulatory scrutiny by the Macau government, which may affect its ability to maintain necessary licenses and permits[106] Risks and Challenges - The company faces significant development and construction risks that may impact project success and debt repayment capabilities[37] - External factors such as economic conditions in mainland China and travel restrictions significantly influence Macau's tourism and gaming activities[34] - The company faces significant risks related to consumer discretionary spending, which can be adversely affected by negative macroeconomic conditions[103] - Recent negative macroeconomic conditions have led to rising interest rates and reduced consumer discretionary spending, impacting the company's financial performance[104] - Geopolitical tensions and government policies may adversely affect product and service demand, leading to economic turmoil and impacting business performance[108] - Travel restrictions and anti-corruption campaigns have reduced visitor numbers from affected regions, negatively impacting revenue and cash flow[109] - The company faces multiple investigations and lawsuits that could divert management's attention and harm its reputation, potentially affecting its gaming licenses and market opportunities[110] - Customer willingness to visit resorts is influenced by terrorism threats, disease outbreaks, and regional political events, which may reduce visitor numbers and financial performance[113] - Global political trends and economic policies have decreased demand for hotel products and services, impacting visitor numbers to resorts[114] - The company's cash flow is entirely dependent on its operations in Macau, posing significant risks compared to competitors with more diversified properties[116] - The company faces increased competition from global casinos, including those in Singapore, South Korea, and other Asian regions, which may adversely affect cash flow and operational performance[121] Corporate Governance and Management - The company has a diverse board of directors with members holding various positions since 2009, including the CEO and President, who have extensive experience in the gaming and hospitality industry[160][162][163] - The current CEO, Mr. Pan, has been with Wynn Resorts since 2017 and has held multiple senior management roles, including President and CFO[162] - Ms. Chen, the President and Vice Chairwoman, has over 30 years of industry experience and has been instrumental in the operations of Wynn Macau and Wynn Palace[163][164] - The company emphasizes the importance of governance and compliance, as demonstrated by the diverse expertise of its board members[180] - The financial and administrative leadership is expected to drive strategic initiatives and improve operational efficiency across departments[188] - The company is committed to maintaining high standards of corporate governance and leveraging the extensive experience of its directors and management team[181] Sustainability and Community Engagement - The company continues to invest in sustainable practices, monitoring energy efficiency and resource consumption[12] - The company has established a corporate social responsibility initiative, "Wynn Cares," and a foundation to support community efforts[163] - The group is committed to environmental responsibility, having developed plans to promote efficient operations and resource conservation[198] - The company has implemented various community initiatives under the "Wynn Care" program to promote sustainable development and responsible gaming in the Greater Bay Area[196] - The company has launched a series of talent development programs since 2022 to transform its management team into future industry leaders[197] - The company collaborates closely with various departments to ensure compliance training for employees regarding regulatory matters[199] - The company has partnered with several universities in 2024 to enhance talent development programs in the Greater Bay Area[197] Financial Position and Debt Management - Cash and cash equivalents as of December 31, 2024, were approximately HKD 11.33 billion, with expectations to use this for debt repayment and operational funding[65] - The capital debt ratio improved to 148.9% in 2024 from 155.8% in 2023, indicating a reduction in net debt relative to total capital[70] - Total borrowings as of December 31, 2024, amounted to HKD 44,838.5 million, down from HKD 52,679.6 million in 2023, reflecting a reduction of about 15%[78] - The company has approximately HKD 27.5 billion available under the WM Cayman II revolving credit facility as of December 31, 2024[81] - The company plans to repay HKD 6.0 billion (approximately USD 800 million) of WML 2024 notes on October 1, 2024[84] - The company has maintained compliance with the covenants of the WM Cayman II revolving credit facility as of December 31, 2024[82] - The company faces foreign exchange risks related to the fluctuation of the exchange rates between the Macanese Pataca, Hong Kong Dollar, and US Dollar[148] - The company has a high leverage ratio, and future cash flows may be insufficient to meet its obligations, potentially complicating access to additional financing[152] - The company's debt agreements contain covenants that may restrict its ability to engage in certain transactions, impacting its operational flexibility[157] Cybersecurity and Data Protection - The company relies on information technology systems to manage and transmit large volumes of sensitive customer and employee data, facing significant cybersecurity risks[128] - Past data security incidents have not significantly impacted the company's financial performance, but future breaches could harm its reputation and lead to legal liabilities[131] - The company must invest in data protection and infrastructure to mitigate increasing cybersecurity threats, which may affect its financial performance[131] - Any improper use of confidential or identifiable personal data could severely damage the company's operations and relationships with customers and employees[132] - Disruptions to the company's IT systems could result in significant financial impacts and require substantial investments for repairs or replacements[133] - The company has implemented various systems, procedures, and technologies to mitigate risks associated with fraud and theft, including employee training and security measures[135] - The rise of fraudulent online gambling and investment websites targeting mainland Chinese citizens poses a significant threat to the company's reputation and business operations[136] Intellectual Property and Licensing - The company relies on a licensing agreement with Wynn Resorts, Limited for the use of "WYNN" trademarks, which could be terminated under certain conditions, potentially disrupting its operations[139] - The company has submitted trademark registration applications in various jurisdictions, including the United States and several Asian countries, to protect its intellectual property[140] - The company faces potential negative impacts on its business and financial performance if unauthorized activities related to its intellectual property continue[137]

Financial Performance - Total revenue for the year ended December 31, 2024, reached HKD 28,740,421, an increase of 18.8% from HKD 24,268,142 in 2023[5] - Adjusted EBITDA for the same period was HKD 8,210,137, up 24% from HKD 6,621,025 in 2023[5] - Profit attributable to owners for 2024 was HKD 3,198,178, a significant increase of 172.5% compared to HKD 1,171,656 in 2023[5] - Basic earnings per share rose to HKD 0.61, compared to HKD 0.22 in the previous year, reflecting a growth of 177.3%[5] - Total operating expenses for the year ended December 31, 2024, amounted to HKD 4.39 billion, an increase from HKD 3.76 billion in 2023[17] - The company's profit before tax for the year ended December 31, 2024, was HKD 3,250,058,000, a significant increase from HKD 1,214,362,000 in 2023[21] - The effective tax rate for 2024 was 12.0%, consistent with the previous year, with total tax expenses amounting to HKD 390,007,000[21] - Net profit attributable to the company's owners increased by 173.0% from HKD 1.17 billion in 2023 to HKD 3.20 billion in 2024[91] Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.185 per share, up from HKD 0.075 per share in 2023[6] - The proposed final dividend for the year ended December 31, 2024, is HKD 0.185 per share, an increase from HKD 0.075 per share in 2023[27] Assets and Liabilities - Non-current assets totaled HKD 26,473,075, a decrease from HKD 27,457,459 in 2023[8] - Current assets decreased to HKD 12,758,455 from HKD 17,371,594 in 2023, largely due to a reduction in trade receivables[8] - Total liabilities decreased to HKD 52,521,827 from HKD 60,639,484 in 2023, indicating improved financial health[9] - The total assets as of December 31, 2024, amount to HKD 39,231,530, a decrease from HKD 44,829,053 in 2023[45] Cash Flow and Financing - The company reported a cash and cash equivalents balance of HKD 11,333,372, which supports its liquidity position despite a total asset deficit of HKD 13,290,297[10] - Operating cash flow for 2024 was HKD 7.694 billion, an increase from HKD 6.812 billion in 2023, reflecting a growth of approximately 12.9%[100] - Investment cash flow for 2024 was HKD 4.830 billion, compared to a cash outflow of HKD 5.409 billion in 2023, indicating a significant turnaround[101] - Financing cash flow for 2024 showed a net outflow of HKD 11.423 billion, a stark contrast to a net inflow of HKD 1.486 billion in 2023, primarily due to loan repayments and interest payments[102] Taxation - The company did not make any provisions for Hong Kong profits tax for the year ended December 31, 2024, as there were no taxable profits[20] - The company has been granted a tax exemption for the Macau supplementary tax on gaming profits at a rate of 12% for the period from January 1, 2023, to December 31, 2027[22] - The company recorded unrecognized tax losses of HKD 1,360,000,000 as of December 31, 2024, down from HKD 4,440,000,000 in 2023[24] Operational Highlights - The company views Wynn Palace and Wynn Macau as two reportable segments for management purposes[16] - Adjusted EBITDA for Wynn Palace is HKD 5,148,874, up 19.2% from HKD 4,311,754 in 2023, while Wynn Macau's adjusted EBITDA is HKD 3,061,263, an increase of 32.5% from HKD 2,309,271[44] - The company operates a casino space of approximately 294,000 square feet, featuring 257 gaming tables and 696 slot machines, providing 24-hour gaming services[51] Market and Competitive Landscape - The company faces competition from 28 other casinos in Macau and potential new entrants from regions like Japan and Taiwan[62] - The competitive landscape in Macau's gaming and hotel industry is intensifying, with 30 casinos operating as of December 31, 2024, including 13 managed by a competitor, which may adversely affect the company's business and financial performance[139] Risks and Challenges - The company faces significant risks related to consumer discretionary spending, which can be adversely affected by negative macroeconomic conditions, impacting its business and financial performance[125] - Recent negative macroeconomic conditions, including inflationary pressures and rising interest rates, may adversely affect the company's gaming revenue and financial condition[126] - The company is exposed to risks related to geopolitical tensions and travel restrictions, which may negatively affect demand for its products and services[129] Compliance and Governance - The company has complied with the corporate governance code throughout the year ending December 31, 2024[173] - The audit and risk committee, consisting of three independent non-executive directors, reviewed the group's performance for the year ending December 31, 2024[175] Capital Expenditures - Capital expenditures for Wynn Palace and Wynn Macau totaled HKD 1,305,963 for the year ended December 31, 2024, compared to HKD 714,296 in 2023, indicating an increase of 82.6%[45] Cybersecurity and Data Protection - The company faces significant cybersecurity risks, including system failures and unauthorized access to sensitive data, which could adversely affect its operations[147] - The company has implemented various systems and procedures to combat fraud and theft, but may not be able to prevent all criminal activities[152] Intellectual Property - The company has made efforts to protect its intellectual property, which may incur high costs and may not guarantee the maintenance of its asset value[154] - The company relies on a licensing agreement with Wynn Resorts, Limited for the use of "WYNN" trademarks, which could be terminated under certain conditions, impacting its business operations[155]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Insights - The company's performance exceeded expectations, with non-gaming activities continuing to diversify [6] - The company achieved a total revenue of 9.3 billion USD in Q4 2024, recovering to 74.7% of the level seen in Q4 2019 [6] - The company is actively enhancing its market share through new initiatives and facilities to attract high-end customers [6] Financial Forecasts and Valuation - Total revenue projections for 2023A, 2024E, 2025E, and 2026E are 24,268.1 million HKD, 28,737.3 million HKD, 31,039.3 million HKD, and 32,661.4 million HKD respectively, with year-on-year growth rates of 330%, 18.4%, 8.0%, and 5.2% [1][7] - Adjusted property EBITDA forecasts for the same years are 7,467 million HKD, 8,995 million HKD, 9,587 million HKD, and 10,018 million HKD, with corresponding growth rates of 20.5%, 6.6%, and 4.5% [1][7] - The target price is set at 8.2 HKD, with the current stock price corresponding to 7.5x, 7.0x, and 6.7x EV/adjusted property EBITDA for 2024E, 2025E, and 2026E respectively [6][7] Operational Performance - The company reported a net gaming revenue of 7.7 billion USD and a non-gaming revenue of 1.6 billion USD in Q4 2024, with quarter-on-quarter growth of 7.1% and 2.8% respectively [6] - The adjusted property EBITDAR for Q4 2024 was 2.9 billion USD, exceeding Bloomberg consensus estimates by 6.2% [6] - The company’s profit margin improved, with an adjusted property EBITDAR margin of 31.6%, reflecting effective cost control measures [6]

Investment Rating - The report maintains a "Buy" rating for Wynn Macau (1128 HK) [1] Core Views - Wynn Macau's Q3 2024 performance fell short of expectations, with market share remaining stable [1] - The company aims to maximize EBITDA by focusing on product and service enhancements, despite intense competition in Macau [2] - Q3 2024 adjusted property EBITDAR margin declined QoQ, though it improved compared to Q3 2019 levels [3] - Revenue recovery in Q3 2024 reached 81 2% of Q3 2019 levels, with gaming and non-gaming net revenues recovering to 78 9% and 93 8% respectively [3] - Adjusted property EBITDAR for Q3 2024 was USD 260 million, down 6 2% QoQ but recovering to 87 3% of 2019 levels [3] Financial Performance Revenue - Q3 2024 gaming revenue reached USD 880 million, recovering to 70 4% of Q3 2019 levels [1] - VIP gaming revenue recovered to 25 3% of Q3 2019 levels [1] - Mass market (including slots) gaming revenue recovered to 106 7% of Q3 2019 levels [1] - Total revenue forecast for 2024-2026: HKD 28 737 million, HKD 31 039 million, and HKD 32 661 million respectively [1] Profitability - Adjusted property EBITDA forecast for 2024-2026: HKD 8 995 million, HKD 9 587 million, and HKD 10 018 million respectively [1] - EV/Adjusted property EBITDA multiples for 2024-2026: 7 89x, 7 40x, and 7 08x respectively [1] - EPS forecast for 2024-2026: HKD 0 48, HKD 0 56, and HKD 0 64 respectively [1] Operational Metrics - Hotel occupancy rate reached 99% in July 2024 [2] - Daily operating expenses increased by 2 0% QoQ to USD 2 55 million in Q3 2024 [3] - Adjusted property EBITDAR margin was 30 2% in Q3 2024, down 1 5 percentage points QoQ but up 2 1 percentage points compared to Q3 2019 [3] Market Position - Wynn Macau's mass market recovery (106 7%) lagged behind the industry average (107 1%) in Q3 2024 [1] - VIP recovery (25 3%) was significantly below the industry average (42 1%) in Q3 2024 [1] - The company plans to optimize and expand F&B facilities and renovate Chairman's Club to enhance service quality [2] Valuation - Target price: HKD 8 2 [4] - Current price: HKD 6 00 [5] - 52-week range: HKD 4 74 - HKD 8 30 [5]

Financial 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 $600 million (approximately HK$4.69 billion) 4.50% convertible bonds due 2029 on March 7, 2023, with net proceeds of $585.9 million (approximately HK$4.60 billion)[65] - The WML convertible bonds can be converted into approximately 459,774,985 shares at an initial conversion price of HK$10.24 per share[66] - As of June 30, 2024, no WML convertible bonds have been converted or redeemed[66] - If all WML convertible bonds are converted at the initial conversion price, Wynn Resorts, Limited's shareholding will decrease from 71.44% to 65.69%[68] - The Capital Group Companies, Inc.'s shareholding will decrease from 5.68% to 5.23% if all WML convertible bonds are converted[68] - Other shareholders' shareholding will decrease from 22.88% to 21.03% if all WML convertible bonds are converted[68] - Bondholders will hold approximately 8.05% of the shares if all WML convertible bonds are converted[68] - The company expects to fulfill its redemption obligations for all outstanding WML convertible bonds upon maturity[69] - WML convertible bondholders can choose to require WML to redeem their bonds on March 7, 2027, at the principal amount plus accrued but unpaid interest, or under specific events such as delisting, change of control, or public shareholding falling below 25%[70] - WML has the option to redeem all, but not part, of the convertible bonds after March 7, 2027, but before March 7, 2029, under certain conditions[70] - WRL provided an unsecured revolving credit facility of up to $500 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

Financial Performance - For the six months ended June 30, 2024, the company reported total revenue of HKD 14,734,134,000, a 37.9% increase from HKD 10,738,615,000 in the same period of 2023[4] - Adjusted EBITDA for the same period was HKD 4,352,599,000, up 57.3% from HKD 2,764,152,000 year-over-year[4] - The net profit attributable to owners for the six months was HKD 1,592,122,000, compared to HKD 87,467,000 in the prior year, representing a significant increase[4] - Basic earnings per share increased to HKD 0.30 from HKD 0.02, while diluted earnings per share improved from a loss of HKD 0.03 to HKD 0.30[4] - Total operating revenue for the six months ended June 30, 2024, was HKD 14,734,134, representing a 37.1% increase from HKD 10,738,615 in the same period of 2023[48] - Adjusted EBITDA for Wynn Palace was HKD 2,729,015, up 46.2% from HKD 1,866,879 in 2023, while Wynn Macau's adjusted EBITDA increased by 81.1% to HKD 1,623,584 from HKD 897,273[50] - The net profit attributable to the owners of the company for the six months ended June 30, 2024, was HKD 1,592,122, compared to HKD 87,467 in 2023, marking a significant increase[50] Dividends and Shareholder Returns - The company declared an interim dividend of HKD 0.075 per share, expected to be paid on September 12, 2024[5] - The declared interim dividend for the six months ended June 30, 2024, is HKD 0.075 per share, consistent with the declared final dividend for 2023[28] Assets and Liabilities - As of June 30, 2024, total non-current assets were HKD 26,700,643,000, a decrease from HKD 27,457,459,000 at the end of 2023[7] - Current assets totaled HKD 16,306,007,000, down from HKD 17,371,594,000 at the end of 2023[7] - Total liabilities decreased to HKD 42,839,443,000 from HKD 45,374,661,000 year-over-year[8] - The company reported a liquidity position with cash and cash equivalents of HKD 108,000,000,000 and investments of HKD 39,000,000,000 as of June 30, 2024[10] - The company’s total interest-bearing borrowings amounted to HKD 50,279,763, a decrease of 4.5% from HKD 52,679,614 as of December 31, 2023[39] Operating Expenses - The company reported a total operating expenses of HKD 2,177,545,000 for the six months ended June 30, 2024, compared to HKD 1,657,219,000 for the same period in 2023, representing an increase of approximately 31.3%[17] - Interest expenses for the six months ended June 30, 2024, were HKD 1,524,464,000, slightly up from HKD 1,514,279,000 in 2023, indicating a marginal increase of 0.9%[18] - The company recorded a tax expense of HKD 26,382,000 for the six months ended June 30, 2024, compared to HKD 6,214,000 for the same period in 2023, reflecting a significant increase of 324.5%[21] Regulatory and Compliance - The company has not adopted any new standards, interpretations, or amendments that have not yet come into effect prior to the reporting period[14] - The company has extended its tax agreement with the Macau SAR, which allows for annual payments in lieu of certain taxes until December 31, 2025[22] - The company is subject to ongoing regulatory oversight by the Macau government, which includes compliance with financial reporting requirements and maintaining adequate financial capacity[58] - The company must obtain government approval for significant corporate changes, including business expansions and financial decisions exceeding 10% of its capital[62] Market and Competition - The company faces competition from 28 other casinos in Macau and potential future competition from countries like Japan and Taiwan that may legalize gaming[71] - The company is facing increased operational costs due to labor shortages and rising maintenance expenses[159] - The company faces increasing competition from casinos worldwide, including those in Singapore, South Korea, and the Philippines, which may negatively impact cash flow and operating performance[163] Risks and Challenges - The company's business is significantly affected by consumer discretionary spending, which can be negatively impacted by adverse macroeconomic conditions, including economic downturns or prolonged recessions[144] - Current macroeconomic deterioration, global economic slowdown, or recession may adversely affect the company's gaming revenue, financial condition, operating performance, and cash flow[146] - The company faces significant risks related to floating interest rate credit facilities, which could negatively impact operational performance due to interest rate fluctuations[199] - The company may face challenges in obtaining additional financing when needed[200] Investments and Developments - The company continues to invest in its integrated resorts in the Greater Bay Area, focusing on renovations and expansions to enhance customer experience[51] - Wynn Palace is currently in the design phase for its next development, which is expected to include a theater, event spaces, and various non-gaming offerings[52] - The company has committed to invest a total of MOP 177.3 billion (approximately HKD 172.1 billion) over the ten-year term of the gaming concession, with MOP 165.0 billion (approximately HKD 160.2 billion) allocated for non-gaming capital projects[65] Cash Flow and Financing - Net cash generated from operating activities increased to HKD 3.805 billion for the six months ending June 30, 2024, from HKD 3.032 billion for the same period in 2023[111] - Net cash used in investing activities was HKD 1.154 billion for the six months ending June 30, 2024, compared to net cash used of HKD 869.1 million for the same period in 2023[112] - Net cash used in financing activities was HKD 4.454 billion for the six months ending June 30, 2024, compared to net cash generated of HKD 3.068 billion for the same period in 2023[114] Employee and Operational Management - The group employs approximately 11,400 staff in Macau, emphasizing employee training and internal mobility to support career development[51] - The company faces intense competition for qualified personnel in Macau, which could adversely affect its operations and financial performance if it fails to attract and retain key management and staff[154]

Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance in Q2 2024 was below expectations, with a profit margin decrease of 2.3 percentage points to 31.7% [3] - The company achieved gaming revenue of $880 million, recovering to 64.3% of the same period in 2019, with VIP and mass market revenues at $140 million and $740 million respectively [2][3] - The management indicated that despite a decline in market share in Q2 2024, the market share has rebounded to expected levels by July 2024 due to strong mass market betting and high hotel occupancy rates [3] Financial Performance Summary - Total revenue for 2023 is projected at HKD 24,268 million, with expected growth to HKD 30,193 million in 2024, HKD 32,396 million in 2025, and HKD 34,142 million in 2026, reflecting a year-on-year growth of 330% in 2023 and 24.4% in 2024 [2][6] - Adjusted property EBITDA is forecasted to be HKD 7,467 million in 2023, increasing to HKD 9,674 million in 2024, HKD 10,187 million in 2025, and HKD 10,740 million in 2026 [2][6] - The adjusted property EBITDA margin is expected to remain stable, with a slight decrease in 2024 [3] Market Share and Competitive Position - The company's market share in mass gaming and overall gaming revenue decreased by 1.5 percentage points to 13.9% and 12.6% respectively in Q2 2024 [2][3] - The management plans to focus on enhancing product and service quality while maintaining a cautious approach to investments amid competitive market conditions [3] Earnings Forecast and Valuation - The net income forecast for 2024-2026 has been revised down to HKD 30.19 billion, HKD 32.40 billion, and HKD 34.14 billion respectively [3] - The target price for the stock is set at HKD 9.5, corresponding to an EV/Adjusted Property EBITDA of 7.3x for 2024, 7.0x for 2025, and 6.6x for 2026 [3]

Investment Rating - The report maintains a "Buy" rating for Wynn Macau (1128.HK) [1] Core Views - The company's performance in Q1 2024 exceeded expectations, with strong recovery in mass gaming revenue [1][3] - The management indicates that the momentum in mass gaming business remains robust since Q2 2024 [3] Financial Performance Summary - For Q1 2024, the company achieved gaming revenue of $1 billion, recovering to 68.9% of the level from Q1 2019 [2] - VIP and mass gaming revenue reached $180 million and $820 million respectively, recovering to 23.2% and 122.6% of Q1 2019 levels [2] - The adjusted property EBITDAR for Q1 2024 was $340 million, exceeding Bloomberg consensus by approximately 10% [3] - The adjusted property EBITDAR margin improved from 30.9% in Q1 2019 to 34.0% in Q1 2024 [3] Earnings Forecast and Valuation - The revenue forecast for 2024-2026 has been raised to HKD 31.08 billion, HKD 33.88 billion, and HKD 35.84 billion respectively [3] - The adjusted property EBITDAR forecast for the same period is updated to HKD 9.68 billion, HKD 10.67 billion, and HKD 11.32 billion [3] - The current stock price corresponds to EV/Adjusted Property EBITDAR multiples of 8.6, 7.8, and 7.3 for 2024-2026 [3] Operational Insights - The average daily operating cost in Q1 2024 was $2.63 million, down approximately 17.8% from $3.20 million in Q1 2019 [3] - The company expects average daily operating costs to fluctuate around $2.6 million in the future [3] - Capital expenditures for 2024-2025 are projected to be between $350 million and $500 million [3]

| --- | --- | |------------------------------------------------------------------------------------------------------------------------|---------------------------------------------| | | | | 2023 Annual Report 年度報告 | | | Wynn Macau, Limited 永利澳門有限公司* | | | (incorporated in the Cayman Islands with limited liability) (於勞曼群島註冊成立的有限公司) Stock Code 股份代號 : 1128 | * for identification purposes only 值供識別 | 2 公司資料 4 摘要 5 管理層討論及分析 54 董事及高級管理層 目 錄 65 董事會報告 109 企業管治報告 125 獨立核數師報告 132 財務報表 226 財務概要 227 定義 239 技術詞彙 2 永利澳門 ...

Financial Performance - For the year ended December 31, 2023, the total revenue reached HKD 24,268,142,000, a significant increase from HKD 5,643,940,000 in 2022, representing a growth of approximately 329%[6] - Adjusted EBITDA for the year was HKD 6,621,025,000, compared to a loss of HKD 1,948,480,000 in the previous year, indicating a substantial recovery[6] - The net profit attributable to owners was HKD 1,171,656,000, a turnaround from a loss of HKD 7,339,270,000 in 2022[6] - Basic earnings per share improved to HKD 0.22 from a loss of HKD 1.41 in the previous year[6] - Total operating revenue for Wynn Palace and Wynn Macau reached HKD 24,268,142, an increase of 329% from HKD 5,643,940 in 2022[54] - Adjusted EBITDA for Wynn Palace was HKD 4,311,754 compared to a loss of HKD 872,587 in 2022, while Wynn Macau reported an adjusted EBITDA of HKD 2,309,271, up from a loss of HKD 1,075,893[56] - The company reported a net profit attributable to shareholders of HKD 1,171,656, a significant recovery from a net loss of HKD 7,339,270 in the previous year[56] - The company reported financing income of HKD 571,267, compared to HKD 81,511 in 2022, while financing costs increased to HKD 3,335,189 from HKD 2,563,024[56] - The company reported a significant increase in hotel room revenue, reaching HKD 1,579,610 for Wynn Palace in 2023, compared to HKD 313,667 in 2022[92] - Casino revenue increased from HKD 3.7 billion in 2022 to HKD 19.1 billion in 2023, accounting for 78.7% of total operating revenue[102] Dividends and Shareholder Returns - The board proposed a final dividend of HKD 0.075 per share for the year, compared to no dividend in 2022[7] - The board proposed a final dividend of HKD 0.075 per share for the year ended December 31, 2023, compared to zero in 2022, pending shareholder approval[32] Assets and Liabilities - Total non-current assets amounted to HKD 27,457,459,000, slightly down from HKD 27,774,438,000 in 2022[9] - Current assets increased significantly to HKD 17,371,594,000 from HKD 8,304,500,000 in 2022, reflecting improved liquidity[9] - The total liabilities decreased to HKD 49,694,872,000 from HKD 48,476,942,000, indicating a slight reduction in financial obligations[10] - The company reported cash and cash equivalents of HKD 10,300,159,000, up from HKD 7,422,901,000 in the previous year, enhancing its liquidity position[9] - As of December 31, 2023, the company's net debt was HKD 44,154.7 million, a slight decrease from HKD 44,822.2 million in 2022[123] - The capital debt ratio improved to 155.8% in 2023 from 162.0% in 2022, indicating a stronger capital structure[123] Taxation - The effective tax expense for the year ended December 31, 2023, was HKD 42,706,000, which is 3.5% of the pre-tax profit, compared to HKD 12,427,000 (0.2%) in 2022[23] - The group has not made provisions for Hong Kong profits tax for the year ended December 31, 2023, as there were no taxable profits from Hong Kong, consistent with 2022[21] - The group recorded unrecognized tax losses of HKD 4.44 billion as of December 31, 2023, down from HKD 6.56 billion in 2022, which is believed to offset any potential adjustments suggested by the Macau tax authorities[28] Financing and Debt - The total interest-bearing borrowings increased from HKD 48,228,497,000 in 2022 to HKD 52,679,614,000 in 2023[47] - The company entered into a revised credit agreement on June 27, 2023, transitioning the benchmark interest rate from LIBOR to SOFR with an adjustment spread of 0.10 basis points[135] - The total revolving credit facility available to WM Cayman II is HKD 11.7 billion, with an option to increase by an additional USD 1 billion (approximately HKD 7.82 billion) under certain conditions[134] - WML issued $600 million (approximately HKD 4.69 billion) 4.50% convertible bonds due in 2029 on March 7, 2023[146] - The net proceeds from the convertible bond issuance amount to $585.9 million (approximately HKD 4.60 billion), which are intended for general corporate purposes[146] Operational Highlights - The company operates primarily in Macau, with its main business segments being the Wynn Palace and Wynn Macau[53] - The company is in the design phase for the next phase of Wynn Palace, which will include a theater and event space, as well as unique dining and non-gaming offerings[61] - The company employs approximately 11,300 staff in Macau, focusing on talent development and community engagement through various initiatives[60] - The company continues to emphasize sustainable development and community support through its Wynn Care program and charitable foundation[60] Market and Economic Conditions - The tourism industry significantly impacts WRM's business, with visitor numbers to Macau increasing by 394.9% in 2023 compared to 2022[81] - The company’s cash flow is primarily dependent on its Macau operations, which poses greater risks due to potential adverse events like COVID-19[175] - The ongoing recovery of the Macau gaming business to pre-pandemic levels remains uncertain, impacting the ability to pay dividends[177] - Negative macroeconomic conditions have led to significant increases in interest rates, reduced consumer discretionary spending, and volatility in capital markets, adversely affecting the company's gaming revenue, financial condition, operating performance, and cash flow[161] Regulatory and Compliance Risks - The company must comply with Macau laws and regulations, and failure to maintain necessary licenses and permits could severely impact its operations[162] - The company faces administrative reviews and approvals from multiple Macau government agencies, and failure to comply with gaming license terms may lead to the revocation of its gaming license[164] - Compliance with anti-money laundering laws and regulations is critical, as violations could adversely affect the company's business and financial performance[182] - The company is subject to strict regulations, and non-compliance could lead to increased operational costs and reduced profits[186] Cybersecurity and Operational Risks - Cybersecurity risks, including system failures and data breaches, pose significant threats to the company's operations and customer data security[188] - The company has implemented internal controls and compliance programs, but there is no guarantee that these measures will effectively prevent violations of policies and laws[184] - The company relies heavily on its computer systems for transaction processing and business management, and any significant disruption could have a major negative impact on business performance and financial status[194] Intellectual Property Risks - The company is licensed to use the "WYNN" trademark, and any challenge to this right could adversely affect business operations and financial performance[199] - The company faces risks if third parties successfully challenge its rights to the "WYNN" trademarks, which could adversely affect its business and operating performance[200]