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Wynn Resorts to rake in $511 million dividend from Macau subsidiary

9 Mar 2015

By Howard Stutz
LAS VEGAS -- The Chinese subsidiary of Wynn Resorts, Limited plans to issue a special stock dividend this month, which will result in the parent company collecting $511 million.

The move comes as Macau’s casino market is in an unprecedented gaming revenue nosedive. February marked the region’s ninth straight monthly decrease, with the 49 percent decline an all-time single-month record.

Wynn Macau Limited, which is traded on the Hong Kong Stock Exchange, said would it pay a dividend of 14 cents per share (in U.S. dollars), or $706 million, to stockholders on March 31.

Wynn Resorts owns 72.3 percent of Wynn Macau.

Macquarie Securities gaming analyst Jamie Zhou, who is based in Hong Kong, said he hadn’t anticipated the company issuing a special dividend, but the result “could signal discontinuation of a regular dividend payout policy for the foreseeable future.”

The special dividend, combined with regular dividends, means Wynn Macau will pay out more than $1.18 billion to shareholders for 2014, an increase of 18 percent over a year ago.

Wynn Resorts spokesman Michael Weaver said proceeds from the dividends would be used for “general operations of the parent company. That’s been the practice since 2006.”

Wynn Resorts is building a $1.6 billion hotel-casino outside of Boston and the company recently spent $6 million to acquire an additional 1.75 acres for the 33-acre site near the Mystic River.

Deutsche Bank gaming analyst Carlo Santarelli said special dividends by U.S. casino companies with Hong Kong Stock Exchange listings are not unusual.

MGM Resorts International collected $389 million in dividends in 2014 through its 51 percent ownership of MGM China. A special dividend will be paid after March 19, in which the parent company will collect $204 million.

MGM Resorts uses dividend proceeds to fund its expansion projects in Las Vegas, Maryland and Massachusetts.

“We have always viewed the year-end dividend as special in that the level of the dividend has variability based on operating results for the preceding calendar year,” Santarelli told investors. “One of the primary reasons for the dividend from the Hong Kong listing is the tax efficiency of the capital return to the parent.”

Macau’s revenue downturn began in June and has been attributed to a crackdown on corruption by the Chinese government focused on junket operators who bring high-end baccarat gamblers to the casino’s ultraexclusive private gambling rooms. Several operators have been linked to Chinese organized crime triads.

In 2014, Macau collected $44.1 billion from gamblers, a decline of 2.6 percent over 2013’s record $45.2 billion. That year marked the first time revenue fell on a year-over-year basis since American companies began operating in the Chinese special administrative region in 2003.

“Overall, we think cash returned from the sector did not disappoint for fiscal year 2014,” UBS Securities Asia analysts Anthony Wong and Angus Chan wrote in an investors note.

In February, Sands China Limited, the subsidiary of Las Vegas Sands Corp., declared a dividend of 32 cents per share for 2014.

Las Vegas Sands and Wynn Resorts rely on Macau for the vast majority of their quarterly earnings.

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