re: Weekly Stock Market Plays/Thoughts - March/April

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Posted on 2/23/17 at 10:46 am to jprice4608
Buy lvs no it's got a near 6% yield and is the biggest casino company with a long runway for growth in Asia. I also like Wynn but lvs has a much higher yield,I have both in size Wynn at $88.80 basis and lvs at $44 basis

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Posted on 2/24/17 at 8:04 am to Iowa Golfer
As for WYNN I know that company inside out as a shareholder and customer. I really never wanted to be a shareholder of wynn as you know it was like $240 or maybe $260 a couple years back. I had to become one in the $50-690 range last year it was too cheap, market cap was down to like $4-5B I wanna say. I will tell you this, the WYNN earnings were spectacular imo. They said there are 35 hotels in Macau and the WYNN controlled over 50% of the VIP segment, that says alot about where the big clients like to go.

I was at the WYNN for the super bowl and the week after and the hotel was fairly dead, which is always is everytime I go but I personally think that has more to do with higher table minimums than most places. As a facility steve wynn said on the conference call people are willing to pay more for the place thats the nicest and is upkept in the most impeccable manner. The Wynn/Encore in vegas is just on a different level from everything else and I personally like it bc it keeps the riff raff of say the linq hotel out.

The real story long term is Macau and Japan which legalized casinos recently and will be the 2nd biggest market in the world, Vegas makes up a small part of WYNN numbers. Macau had a huge crackdown on the VIP players a couple years ago and all casinos died. You have Melco Crown,MGM, and Las Vegas Sands aimed at the mass market and Wynn aimed at the high market. Sands pays a sick dividend almost 6% but im not sure how sustainable it is long term if earnings dont pick up bc its payout ratio tops 100%, meanwhile WYNN said he could raise the dividend 50% right now but he's not bc of the projects coming.

At the moment WYNN has substantial debt I wanna say near $10B and their market cap is near $10B, but all the debt is manageable and the stock trades currently at like 10x EBITDA. The reason I think it goes higher is the WYNN palace is the best hotel in cotai area and it just launched 6 months ago and the cc he said its doing $1.6M/day of EBITDA and was the fastest property he's ever seen to the $1M/day mark. Anyways there is that + they're building the first and only boston area casino which should be done in less than 24 months and that will supposedly give off $300-500M in EBITDA which should add $3-5B in market cap or 33% off today.

I was just there like I said and I dont know how well you know the place but if you remember where the Ferrari Dealer/Steve Wynn personal car collection was? Well a mall is going up there called Wynn Plaza set to open late this year, you can read how its 110,000 sq ft mall and they already sold 49% stake to someone for $275M I believe? Anyways Steve said that he turned a space making literally no money into prime retail leasing for $300/ft for a total of $50M and it was a no brainer. He literally invested $50M and got back $275M upfront and will basically make $150/ft now on it and im sure there's a waitlist to lease it. Finally the big one is Wynn Paradise Park. The paradise park is basically another brilliant move by steve where he's taking that massive golf course that does $3-5M/year in EBITDA he said and building another tower + boardwalk + massive water park that he says will do $500M in EBITDA. He says the golf course was a placeholder till he had a brilliant idea.

So all in all wynn paradise park + wynn plaza + wynn boston seems to be adding lets say $1B a year in EBITDA thats double today's EBITDA therefore shareprice should rise substantially assuming Macau has no setbacks but you never know with that communist nation of nation and potential trade wars with china.

I'd say casinos are a long term play on china and its growth story, macau already eclipses vegas by many fold in terms of revenue and that will only grow. LVS i think is safer, but the market cap is $40B+ I dont see the upside of the WYNN at sub $10B. I have both, but a larger stake in Wynn and thats my thesis. After earnings I held hoping we'd break $104 and hold when we didn't I sold at $102.5 and its fallen back quite a bit, hopefully early march macau numbers show continued growth. The stock chartwise has been in purgatory for a long team, it needs $104+ to breakout so id prob add now and then more up there.

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