Wynn Resorts’ new integrated resort development in the United Arab Emirates should contribute more than US$350 million worth of annual free cash flow to the company’s coffers, adding significant value to investors according to CBRE Equity Research analyst John DeCree.
His comments come after Wynn announced last week that it had been granted a gaming license for Wynn Al Marjan Island by the General Commercial Gaming Regulatory Authority (GCGRA) of the UAE, representing a major milestone for the US$4 billion project. Wynn is also due to host an investors day in Las Vegas on Tuesday local time to discuss the UAE opportunity.
In a note, CBRE said the newly issued license “should lead to increased equity investor interest”, although “investors have given no credit to Wynn for Wynn Al Marjan Island, which we estimate could generate ~US$920 million of EBITDA.
“Based on the company’s 40% ownership interest and management contract, we estimate Wynn Al Marjan Island could contribute over US$350 million of FCF to Wynn when fully stabilized.”
CBRE added that issuance of Wynn’s gaming license should help quell investor concerns.
“We don’t anticipate any broad publication of formal legislation decriminalizing gaming, at least not yet, partly due to the cultural sensitivities to gaming in the region,” DeCree wrote.
“The UAE is very thoughtful and deliberate in its approach and we remain comfortable enough with the legislative and regulatory landscape.”
CBRE has become “incrementally more bullish” on Wynn following its UAE license announcement and the recent news that mainland China has issued a substantial stimulus package, DeCree added, with the research house reiterating its “Buy” rating on Wynn stocks.
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