International edition
September 25, 2021

Its us$ 1.6 billion IPO is the world's sixth largest this year

Wynn Macau debut cashes in on Asia gaming fever

(Macau).- Wynn Macau's strong debut in Hong Kong on Friday shows appetite for gambling stocks is strong despite high valuations, and will cheer rival Las Vegas Sands, which plans a listing later this year.

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ynn Macau shares ended 6 % higher at us$ 1.38 versus an IPO price of us$ 1.30, defying forecasts of, at best, a flat start due to its relatively high IPO price. The closing price valued the casino giant at us$ 6.9 billion.

"For big-cap IPOs, its performance is pretty good," said Peter Pak, vice president at BOCI Research. "Its pricing is not cheap, but Macau's gaming revenue has been rising and that helped boost confidence."

Wynn Macau's us$1.63 billion IPO, the world's sixth-largest this year, representing a 25 % stake in his Macau operations, could speed up the expected listing for Las Vegas Sands, which plans to raise up to us$ 2 billion in a Hong Kong offering for its Asia assets, most notably in Macau. It precedes a similar move by Las Vegas Sands Corp., led by tycoon and Wynn rival Sheldon Adelson, who is expected to sell us$ 2 billion of shares in his company's Macau operations and list them on Hong Kong's stock exchange.

Traders had said previously that the IPO would do well given that it was a play on Macau gaming revenue growth. Investment bank J.P. Morgan Chase & Co. ( JPM), which is an underwriter in Wynn Macau's IPO, said it expects October gaming revenue to rise reach at least 32 % on-year to MOP 11.7 billion.

"If the current trend of the gaming revenue is sustained, we see further upside to the consensus for the gaming names," it said. Other underwriters for Wynn Macau's IPO are Bank of America Merrill Lynch, Deutsche Bank AG (DB), Morgan Stanley (MS) and UBS AG (UBS).

The lack of a huge retail following also worked in Wynn Macau's favor, said Castor Pang, the research director at Cinda International. "Retail investors are more jittery about market fluctuations, so they are more likely to dump the shares on the first day," he said.

Gambling revenues hit a monthly high of us$ 1.4 billion in August, a faster-than-expected recovery compared with Las Vegas, and revenues are expected to have been stronger still in September as China relaxed restrictions on its citizens crossing into Macau from Guangdong province.

Wynn Macau, which holds one of the six gaming licenses in Macau, is currently building a new resort called Encore. When completed next year, the new facility will boost Wynn Macau's VIP tables by 44 % to 215.

Wynn's IPO comes just two days after Banco Santander Brasil SA made its debut in U.S. trade after raising us$ 7 billion in the world's second-biggest IPO this year. China State Construction Engineering Corp.'s us$ 7.3 billion Shanghai offering is the largest so far in 2009, according to Dealogic.

Wynn, which had a 16.4 % market share of Macau in 2008, is one of a handful of gambling "pure plays" there, with Melco Crown Entertainment, Galaxy Entertainment Group and SJM Holdings. The listing by the Asia unit of Wynn Resorts marked a major victory for Hong Kong's stock market, netting its first IPO for a big global brand in years.

"Wynn is a known name compared with other recent IPOs that many people have not heard about, so it's probably easier to sell," said Nicholas Yeo, head of China and Hong Kong equities at Aberdeen Asset Management. Wynn's healthy debut would be positive for Las Vegas Sands, fund managers and analysts said.

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