Key Takeaways:
Citigroup raised its price target for Wynn Macau Ltd. (1128.HK) to HK$7.7, citing enhanced long-term competitiveness from a planned $950 million all-suite hotel tower at its Wynn Palace resort in Cotai.
"The new hotel will help Wynn Macau maintain its long-term competitiveness," Citigroup said in a research note, while reaffirming its "Buy" rating on the stock.
The bank's price target increased from a previous HK$7.55. The new non-gaming tower, branded "The Enclave at Wynn Palace," features a capital budget of $900 million to $950 million for 432 suites. Construction is scheduled to begin in the second half of 2026 and is expected to take two and a half years to complete.
Management projects the tower could generate an additional $150 million to $175 million in annual earnings before interest, taxes, depreciation, and amortization (EBITDA), implying a mid-double-digit return on investment. The expansion adds room capacity to a property that Wynn Resorts CEO Craig Billings said "runs at essentially full occupancy every night."
The Enclave will be connected to the east entrance of the existing Wynn Palace. Billings confirmed the tower "does not have a gaming element" and will have "very, very modest food and beverage" offerings, as it will leverage the amenities of the main property. The location, currently a bus entrance, is expected to cause minimal disruption to operations during the construction phase.
The move comes after Wynn Macau reported first-quarter results that slightly missed some market expectations. Property EBITDA at Wynn Palace rose 26 percent year-over-year to $204 million, while the peninsula-based Wynn Macau property saw its EBITDA decline 16 percent to $76 million. Overall group market share stood at 12.4 percent for the quarter. Research from CLSA noted the company's property EBITDA of HKD2.18 billion was 6 percent below market consensus.
Separately, Wynn Resorts expects a "modest delay" for its Wynn Al Marjan Island project in the United Arab Emirates, which was originally slated to open in the spring of 2027. Billings stated that while logistical challenges have emerged due to regional conflict, construction continues to progress.
The addition of the Enclave tower is a significant capital expenditure for Wynn Macau, which updated its 2027 guidance to between $700 million and $750 million to account for the project. The investment underscores the company's focus on capturing high-end, non-gaming demand in the world's largest gambling hub. Investors will watch for government approvals and the start of construction in 2026 as the next major catalysts.
This article is for informational purposes only and does not constitute investment advice.
