Editor's note: Seeking Alpha is proud to welcome DP Technologies as a new contributor. It's easy to become a Seeking Alpha contributor and earn money for your best investment ideas. Active contributors also get free access to SA Essential. Click here to find out more ?recommend casino On August 7th, Wynn Resorts Ltd. (WYNN) will report their 2nd-quarter financial results. As more than 75% of Wynn's 2018 EBITDA came from Macau, their operations there will surely receive the lion's share of questioning, per usual. However, Wynn recently opened a brand new resort-casino in Massachusetts, where Bernstein suggests 16% of Wynn's EBITDA could eventually be generated. However, the new resort-casino's prospects might not be as great as Wynn Resorts and Wall Street analysts proclaim. Encore Boston Harbor, Wynn Resorts' newest addition to their gambling empire, has now been open for over a month. Overlooking the city of Boston, the $2.6--Billion, 3 million square--foot complex has 671 rooms, "a 210,00--square--foot casino, 15 dining and lounge venues (including a buffet, of course), 50,000 square feet of indoor and outdoor event space, a spa with 16 treatment rooms, 10,000 square feet of retail space and a six--acre park," according to CNBC. The casino is larger than the nearly- 200,000 square--foot Wynn/Encore casino in Las Vegas, the largest casino in Las Vegas. During its 2019 investor conference, Wynn Resorts shared their preliminary forecast for Encore Boston Harbor. For revenue, they projected a low, base and high case of $900M, $1B, and $1.1B in revenues, respectively. In addition, Wynn forecasted a low, base, and high case of 25%, 27.5%, and 29.5% EBITDA margins, respectively. These numbers are intended to model the resort running smoothly in a "steady state." According to Wynn, Encore Boston Harbor won't enter a "steady state" until roughly 36 months out -- around Q1 2021. In this article, we describe why these expectations, stemming from the revenue forecast, are unreasonable given the current positioning of the resort -- in our view, its insufficient competitive edge.
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