Wynn and Melco Projects Offer Potential for Future Growth

Wynn Resorts Ltd and Melco Resorts & Entertainment Ltd could benefit from a range of development projects and investment plans, according to Texas Capital Securities. The brokerage highlighted opportunities in Macau, new hotel capacity, entertainment facilities and overseas resorts as potential contributors to the casino groups’ future performance.

Texas Capital analyst David Bain said Wynn Resorts remains confident in Macau’s long-term investment prospects despite recent softness in casino gross gaming revenue (GGR). The comments followed a meeting with the operator’s representatives earlier in October.

Wynn Advances Macau and UAE Developments

Among Wynn Resorts’ planned investments in Macau, Texas Capital highlighted a new Enclave hotel tower at Wynn Palace and a proposed theatre at the property. The projects could broaden the resort’s attractions and create additional opportunities to draw visitors.

Wynn Resorts continues to view Macau as an attractive market, although third-quarter casino GGR came in slightly below some investors’ expectations. The softer results followed a stronger period after the FIFA World Cup football tournament concluded in mid-July.

Texas Capital said the recent fluctuations in Macau’s GGR had not altered Wynn Resorts’ positive assessment of the market’s long-term potential.

The brokerage also identified Wynn Al Marjan Island in Ras Al Khaimah, United Arab Emirates, as an important future development. Based on discussions with company representatives in early October, the resort is scheduled to open in September 2027.

The $5.7 billion project is being developed jointly by Wynn Resorts, Marjan LLC and RAK Hospitality Holding LLC. Wynn Resorts owns a 40% equity stake in the development.

According to Texas Capital, the potential value of Wynn Al Marjan Island has yet to be fully reflected in the company’s share price. The brokerage also highlighted the range of potential feeder markets for the UAE resort.

It added that expectations for the project’s returns have remained broadly unchanged despite geopolitical tensions in the Middle East.

Melco Anticipates Further Progress at City of Dreams Macau

For Melco Resorts, Texas Capital pointed to the planned fuller opening of the REM hotel accommodation at City of Dreams Macau as a potential driver of improved performance. The hotel is expected to open later in October.

The brokerage expects the additional accommodation to provide greater visibility into revenue growth at the Macau property. It also anticipates lower operating costs associated with the venue compared with its initial opening phase.

Bain suggested that the third quarter could mark a low point for Melco Resorts’ earnings. The disruption associated with the City of Dreams Macau development is expected to be followed by new growth opportunities as more hotel accommodation becomes available.

Texas Capital also cited Melco’s share valuation and ongoing share buybacks as possible sources of support for its stock.

The company repurchased approximately $121 million worth of shares in the second quarter, leaving around $590 million available under its existing repurchase authorisation. The brokerage expects additional buybacks at current share prices.

Texas Capital estimates Melco’s free cash flow yield at approximately 24%. It also values the company at around 6.5 times its projected 2027 enterprise value to EBITDA, a level close to an all-time low.

Texas Capital Forecasts Mixed Results Across Melco Properties

Melco Resorts operates casinos in Macau and Cyprus, alongside casino businesses run with local real estate partners in the Philippines and Sri Lanka.

Texas Capital expects City of Dreams Mediterranean and Melco’s other Cyprus operations to deliver combined property EBITDA of approximately $76.8 million in 2027, up from an estimated $70.3 million in 2026.

For City of Dreams Manila, the brokerage forecasts property EBITDA of $116.4 million in 2027, compared with an estimated $126.3 million for 2026.

Across the group, Texas Capital projects Melco Resorts’ adjusted EBITDA to increase to approximately $1.22 billion in 2027, from an estimated $1.17 billion in 2026.