Wynn Resorts’ new integrated resort development in the United Arab Emirates will generate more than US$350 million worth of annual free cash flow into the company’s coffers, according to CBRE Equity Research analyst John Decley. , which should bring significant value to investors.
His comments follow Wynn’s announcement last week that it had been granted a gaming license for Wynn Al Marjan Island by the UAE’s General Commercial Gaming Regulatory Authority (GCGRA), which is valued at US$4 billion. This is a major milestone for the project. Wynn will also host an investor day in Las Vegas on Tuesday local time to discuss opportunities in the UAE.
CBRE said in a note that the newly issued licenses “should lead to increased interest from equity investors,” but added, “While investors do not have confidence in Wynn for Wynn Al Marjan Island, We estimate that this could generate up to USD 920 million in EBITDA.”
“Based on our 40% ownership and management agreement, we estimate that Wynn Al Marjan Island, once fully stabilized, will be able to contribute more than US$350 million in FCF to Wynn. ”
CBRE added that the issuance of Wynn’s gaming license should help ease investor concerns.
“Due to cultural sensitivities towards gaming in the region, we do not anticipate widespread formal legislation to decriminalize gaming, at least not yet,” Dicley wrote.
“The UAE has been very thoughtful and cautious in its approach and we remain fully satisfied with the legislative and regulatory situation.”
CBRE added that it is “increasingly bullish” on Wynn following the UAE license announcement and recent news that mainland China announced a significant economic stimulus package, adding that the research firm is “becoming increasingly bullish” on Wynn stock. The company reiterated its rating of “buy.”