Chilton opens new position in Wynn Resorts



Chilton Investment Company and Wynn Resorts

Chilton added new positions in Actavis Plc (ACT), Medtronic Inc. (MDT), Wynn Resorts Ltd. (WYNN), and Priceline Group Inc. (PCLN). It sold stakes in Occidental Petroleum (OXY). The fund increased positions in TransDigm Group Inc. (TDG), Home Depot Inc. (HD), and McDonald’s Corp. (MCD). The fund lowered its positions in Dollar General (DG) and Walmart (WMT).

Chilton Investment Company initiated a new position in WYNN. It accounts for 1.25% of the fund’s third quarter US long portfolio.

Article continues below advertisement

About Wynn Resorts

WYNN is based in Nevada. It develops, owns, and operates casino resorts. It operates through its subsidiaries—Wynn Macau and Wynn Las Vegas. It has casino hotel resort properties in Macau and Las Vegas, respectively.

WYNN earns its revenues through casinos and hotels. It earns revenues from food and beverage, entertainment, and retail operations. Casino revenues represent 75% of WYNN’s total revenues. Food and beverage revenues and hotel room revenues contributed 10% and 8%, respectively, to the total revenue.

WYNN’s developments

Currently, WYNN is constructing Wynn Palace. It’s a fully-integrated resort in the Cotai area of Macau. Wynn Palace features a 1,700-room hotel. It has meeting space, a casino, a spa, retail offerings, and food and beverage outlets. The company expects to open Wynn Palace in the first half of 2016. In July 2013, WYNN signed a $2.6 billion guaranteed maximum price, or GMP, contract to construct Wynn Palace. The project’s total budget is ~$4.1 billion. As of September 30, 2014, WYNN had invested ~$1.4 billion in the project.

Article continues below advertisement

Tax exemption

WYNN received a second five-year tax exemption from Macau’s 12% complementary tax on casino gaming profits. The exemption is through December 31, 2015. For 2014 year-to-date, or YTD, WYNN was exempted from paying such taxes—totaling $80.4 million.

However, WYNN’s non-gaming profits are subject to the Macau complementary tax. The casino winnings remain subject to the Macau special gaming tax and other levies. Together, they total 39%—in accordance with its concession agreement with the Macau government.

Revenue growth is almost flat

Net revenues for 3Q14 were $1,370 million—compared to $1,390.1 million in 3Q13. Revenue growth has been almost flat in 2014. This is because WYNN gets more than 70% of its revenues from its Macau operations. In Macau, revenues were negatively affected over the last two quarters. The lower revenues were mainly due to lower VIP gaming activity. VIP participation was lower because of the ongoing anti-corruption campaign in China.

However, revenues are expected to grow by 30% in 2016. The growth is mainly attributed to Wynn Palace. It should open in the first half of 2016.

To learn more about WYNN, read An important overview of Wynn Resorts.

The next part of this series will review Chilton’s new position in PCLN.


More From Market Realist