According to Wynn Resorts, junkets accounted for less than 15% of its EBITDA in the second half of 2019. Suncity accounted for about one third of that junket business. We consider this a manageable amount. Wynn’s junket risk may fall further as Wynn implements a strategy to favor the high-margin premium mass markets over VIPs. The company discussed this shift during its third quarter earnings call.

We’ve been pivoting luxurious assets previously owned by junket operators over the past three years. They have been made available for premium mass. We are blessed to have access to the most valuable assets and highest quality service on the market. So the pivot is very, very straight forward for us,” Ian Coughlan, President & Executive Director of Wynn Macau Limited, explained on the conference call.

The news will have an effect on Macao sentiment more than earnings but you must not forget Wynn Resorts’ domestic interests, at the current price. In a November 9th note by Deutsche Bank, the analysts (who have a $131 price target on WYNN) said the value of the company’s domestic portfolio was worth about $70 per share on a sum-of-the-parts basis, while the value of Wynn’s stake in Macao was worth about $61 per share.

Wynn’s domestic operations are worth a lot of money, according to our opinion. Wynn Interactive’s Las Vegas properties and Boston properties have been producing records in adjusted EBITDA. Wynn Interactive will be retooling their business model toward a targeted ROI-focused strategy. Deutsche Bank’s view that Macao is worth $70/per can be argued that Macao has been discounted beyond a reasonable point.