Win UAE Tax, Rich Regions, Winning Combo: JPM
The regulatory framework, including tax rates, for Wynn Resorts’ multibillion-dollar United Arab Emirates (UAE) project is “comparable to some of the largest IRs” [integrated resort] ” said a commentary from JP Morgan Securities LLC.
The brokerage also said Wynn Resorts’ financial projections for the Wynn Al Marjan Island project are “less aggressive” given what it calls the company’s “first-mover advantage” in the market. said.
JPMorgan added that the project’s “core target market” “represents approximately 25 percent of the world’s population and 20 percent of global GDP.” [gross domestic product]and almost 20 percent of the world’s billionaires. ”
Wynn Resorts confirmed on October 4 that it has received the UAE’s first gaming license for its plans in Ras Al Khaimah, an emirate within the UAE’s federal structure. On October 8, the company also provided investors and analysts with an update on development costs and financial modeling.
“The regulatory framework is weak relative to some of the world’s largest IR markets,” JPMorgan analysts Joseph Greff and Samuel Nielsen said in an update after JPMorgan attended the Wynn Resorts briefing. “The tax rate is 10% to 12%,” he said. Casino gross gaming revenue (GGR) is 40% compared to Macau, Singapore’s VIPs are between 8% and 12%, and the general public is between 18% and 22%. ”
Wynn Resorts is the parent company of Wynn Macau Co., Ltd., a Macau casino concession company.
Analysts also note that Ras Al Khaimah has a “license period of 15 years,” compared to “10 years in Macau,” and that “there are real estate ownership rights with easy fees and credits for players.” “What we can offer.”
Fee simple is a legal term used in the real estate field to mean complete and irrevocable ownership of land and buildings on that land.
Analysts also said: [UAE]is likely to be license-restricted and focused on the region’s high-spending luxury consumers, but with characteristics similar to Singapore’s attractive and high return on investment market. There is a possibility.
There is competition, but not yet.
Wynn Resorts said in a presentation that the group expects two more casino resorts to be approved in the UAE. MGM Resorts International recently announced that it has applied for a casino license in Abu Dhabi.
The UAE is made up of seven emirates. These are Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Ras Al Khaimah, and Fujairah.
The inflation-adjusted cost of Win Al Marjan Island is estimated at US$5.1 billion, including land, capitalized interest and fees. Wynn Resorts holds a 40% equity interest in the project, with local partners holding a combined 60%.
Based on Tuesday’s presentation data, JPMorgan said Wynn Resorts had “steady-state GGR of US$1.0 billion to US$1.66 billion, operating revenue of US$1.375 billion to US$1.875 billion, and adjusted real estate EBITDA of US$1.375 billion to US$1.875 billion.” I look forward to it,” he reiterated. [earnings before interest, taxation, depreciation and amortisation] USD 500 million to USD 800 million means margins and EBITDA of 26% to 43%. [hotel] The key is almost the same as Wynn Macau [Ltd] The strategy is at the halfway point. ”
The agency added: “These scenarios are based on the assumption that the UAE’s total addressable market is between $3 billion and $5 billion, and assume a 33 percent market share with two other operators, which is conservative given the first-mover advantage. In our view, this is likely to be the case.” ”
He added: “We believe Wynn can enjoy market exclusivity there for at least a few years, and success there could potentially bode well for other similar opportunities (Thailand).”
In May, during Wynn Resorts’ first-quarter earnings call, CEO Craig Billings said the group was “aggressively pursuing greenfield development opportunities in New York City and potentially Thailand.” We are considering the matter,” he said.
However, he added, “It is still in its early stages in Thailand, and the regulatory and licensing mechanisms are not yet clear.”
The existing conditions of Thailand’s casino legalization bill reportedly provide for licenses for up to 30 years, with the possibility of renewal for up to 10 years. Public comments during a recent consultation process suggested different numbers for the license period.