Any Fertitta bid for Wynn complicated by Macau: CBRE

Analysts John DeCree and Max Marsh noted in a Friday memo that news on Thursday that Mr Fertitta had upped his stake in Wynn Resorts to 9.9 percent – from a 6.1 percent “passive” stake disclosed in October 2022 – meant he was now the second-largest shareholder behind Elaine Wynn.

The casino group is the parent of Macau operator Wynn Macau Ltd, and the group also has a licence for the under-construction Wynn Al Marjan Island in Ras Al Khaimah, in the UAE.

Though CBRE also noted: “Fertitta was able to buy an incremental 3.8 percent stake in some of the most iconic gaming assets in the world for less than 8 times 2024 EBITDA [earnings before interest, taxation, depreciation and amortisation].”

The brokerage added: “This is a bargain, especially compared with the approximately 10x multiple he would likely need to pay for a single standalone regional casino today, or the US$3 billion-plus likely needed to develop his proposed casino resort on the Las Vegas Strip.”

The CBRE analysts added: “We view his recent move … as an attractive value investment that could become strategic if a unique situation arises, such as an unfavourable economic cycle that results in further dislocation in the shares.”

Regarding Macau, the institution stated that “exiting or selling down” the group’s Macau operations would be “an unattractive option”, with Wynn Macau Ltd “currently trading at less than 8 times forward EBITDA”.

The analysts wrote: “While we recognise Wynn [Resorts] shares remain undervalued, we see little opportunity to add incremental value from an operational perspective.”

“Las Vegas is generating recorded levels of revenue and EBITDA and remains strong even as year-on-year comparisons get increasingly harder,” they stated. “Market share in Macau has remained stable despite the onslaught of a new competition and unfavourable economic conditions in China.”

The CBRE team added: “Management has also proven to be prudent stewards of capital, securing a one-of-a-kind, high return-on-investment project in the UAE, avoiding significant losses in the competitive U.S. sports betting industry, and now returning capital to shareholders.”