From Wallstreet Journal - you dont need to be in Macau to believ

Wynn Resorts Wins Big
With Developments in Asia
By LESLIE P. NORTON
November 19, 2006

November has been a good month for shareholders of Wynn Resorts. Its brand-new Macau casino grabbed 12% of the market in October.

And last week, Wynn rewarded shareholders with a special $6-a-share dividend, two-thirds of the proceeds of $900 million it received from selling some of its casino-development rights in the former Portuguese colony -- the only place in China that allows casino gambling.

There's plenty more where that came from. In an interview, the company's flamboyant chief executive, Steve Wynn, proclaimed: "Macau is directly in the path of a huge avalanche of revenue."

This year, Wynn shares are up 69% to a recent $93, putting the stock at a big premium to rivals Harrah's Entertainment and MGM Mirage. But it's still cheap compared with shares of archrival Las Vegas Sands, which opened Macau's first large Western-style casino in 2004. And some big investors think it may be worth much more.


Wynn came public four years ago amid widespread skepticism about the Las Vegas Strip's ability to support another big casino, and there are similar concerns about Macau amid a spate of casino construction there. It's the early days, but Mr. Wynn has speeded expansion, "stunned" by the large amounts customers were willing to pay at his restaurants and the fact that his non-VIP tables generated more business "than all of Wynn Las Vegas."

But betting against Wynn has been a mug's game from the outset: The shares are up 532% since their IPO.

Next on the agenda: Announcement of developments on Cotai, Macau's version of the Strip, where Wynn has 52 acres -- big enough to hold two large resorts. Then there's the $1.74 billion Encore, which will open in Las Vegas in early 2009. Wynn is also looking into Japan, where authorities may legalize casino gambling, and a possible venture in Atlantic City.

Deutsche Bank's Bill Lerner, who has "conservatively" valued Wynn at above $92 a share, notes that the valuation doesn't include any of Cotai's potential. Joe Fath of T. Rowe Price, a big Wynn shareholder, is even more bullish. Assuming Wynn's Cotai developments open as planned in 2009, Mr. Fath thinks cash flow could zoom to $1.7 billion in 2012 from $186 million last year. "Very conservatively, you could get a $140 stock," Mr. Fatah says.