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Let me start with Stanley Ho. How many of you have even heard of Mr. Ho? If you are of Chinese descent or maybe an international traveler or gambler,you may have heard of Mr.Ho. If you gambled in a Macau casino or visited Macau prior to 2002 you were in the neighborhood of Mr. Ho. From 1962 until 2002 Mr. Ho had a monopoly and owned all 19 casinos in Macau. Mr. Ho at 86 years old has built an empire estimated at $ 7 billion dollars at his casinos and from 1962 to 2002 in Macau he was the only game in town. So,if between 1962 and 2002 you visited Macau and rolled the dice or pulled the one-arm bandits,Mr. Ho sends his thanks.
Then in 2002 the door was opened to Macau and the competition rushed in to compete with Mr. Ho. And one of the main competitors that rushed in was Steven Wynn of Wynn Resorts.. Mr. Wynn has been a fixture in Vegas for many years and is trying to hit an inside straight in Macau. To the gamblers among you the odds of hitting an inside straight are not in your favor. But,I think Mr. Wynn may very well hit his inside straight and he already has a foot in the door and he's looking to improve his hand.
Mr. Wynn has already built a 600 room hotel and casino in he's not stopping there. Mr. Wynn already has in place financing to erect a 400 room hotel and casino adjacent to the Wynn Macau Casino The new structure will be a tower called The Encore. And Mr.Wynn isn't planning to stop there. Mr. Wynn is trying to issue a new IPO on the Hong Kong market to raise up to $3 billion to build another 1500 to 1800 room hotel and casino on 52 acres he' has already bought. It may sound like overkill but I think Macau is going to be a gambling and tourist sight that will be the Vegas of the east.
Now let's look at the Wynn stock and decide if we should roll the dice. The Vegas part of the Wynn empire is to say the least slowing. I also looked at some other gaming stocks such as LVS and IGT and some others and Wynn seems to be fairing as well as the others. But Wynn and the Las Vegas Sands have an ace up their sleeves-Macau. Wynns Vegas net income for for 2nd quarter 2008 was between $18-22 million compared to a net of $63.4 million for the 2nd quarter 2007. The Wynn Macau Casino net is expected to grow from about $53 million 2nd quarter 2007 to between $100-106 million 2nd quarter 2008. With the growing number of casinos in Macau there seems to be no over-kill so far.At least for now the Vegas resort is a drag on the Macau casino earnings,but the Vegas Wynns will rebound as the economy does. Wynn Resorts is currently in the process of a $ 1.5 billion dollar share buyback.
Mr. Wynn has the Vegas Wynn Resorts and the Wynn Macau Casino in operation. He has the financing in place to erect the new 400 room Encore adjacent to the Wynn Macau. He is now looking to raise $3 billion to build the new 1500-1800 room hotel and casino in Macau and I think he may become the gaming leader in Macau. Mr. Ho had never been transparent until going public and he may have some legal problems. The Ho family is also having some internal problems and now seems to be the optimum time for Mr. Wynn to make some inroad into the Ho empire. When all 3 Wynn Macau casinos are up and running by late 2009 or early 2010 and by then the Vegas Wynn Resort should be gaining some momentum,I think the house odds at Wynn Resorts are in our favor and I would recommend we take a seat at the table and start accumulating Wynn.
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