Wynn Macau debut cashes in on Asia gaming fever

Wynn Macau's (1128.HK) strong debut in Hong Kong on Friday shows appetite for gambling stocks is strong despite high valuations, and will cheer rival Las Vegas Sands (LVS.N), which plans a listing later this year.
Wynn Macau shares ended 6 percent higher at HK$10.70 versus an IPO price of HK$10.08, defying forecasts of, at best, a flat start due to its relatively high IPO price. The closing price valued the casino giant at $6.9 billion.
"For big-cap IPOs, its performance is pretty good," said Peter Pak, vice president at BOCI Research. "Its pricing is not cheap, but Macau's gaming revenue has been rising and that helped boost confidence."
Wynn Macau's $1.63 billion IPO, the world's sixth-largest this year, could speed up the expected listing for Las Vegas Sands, which plans to raise up to $2 billion in a Hong Kong offering for its Asia assets, most notably in Macau.
Macau, once owned by Portugal and now a special administrative region under Chinese rule, is the world's biggest gambling market and the only place in China where gambling is legal.
Gambling revenues hit a monthly high of $1.4 billion in August, a faster-than-expected recovery compared with Las Vegas, and revenues are expected to have been stronger still in September as China relaxed restrictions on its citizens crossing into Macau from Guangdong province.
Wynn, which had a 16.4 percent market share of Macau in 2008, is one of a handful of gambling "pure plays" there, with Melco Crown Entertainment (MPEL.O), Galaxy Entertainment Group (0027.HK) and SJM Holdings (0880.HK).
The listing by the Asia unit of Wynn Resorts (WYNN.O) marked a major victory for Hong Kong's stock market, netting its first IPO for a big global brand in years.
"Wynn is a known name compared with other recent IPOs that many people have not heard about, so it's probably easier to sell," said Nicholas Yeo, head of China and Hong Kong equities at Aberdeen Asset Management.
Wynn's healthy debut would be positive for Las Vegas Sands, fund managers and analysts said.
"The strong debut will boost the valuations of LVS's IPO," said Antonny Cheng, managing director at Gain Asset Management.
The Wynn Macau offering comes as the global IPO market heats up, encouraged by a rebound in stock markets worldwide. Santander Brasil (SANB11.SA)(BSBR.N) and Verisk Analytics (VRSK.O) raised nearly $10 billion between them on Tuesday.
IPO JACKPOT
The strong reception for Wynn, and for Yingde Gases Group (2168.HK) and Ausnutria Dairy Corp (1717.HK), among others, on Thursday, could end a trend of weak performance in recent offerings as sentiment improves, brokers said.
"There are still fund inflows from overseas and from China that are looking for short-term trading opportunities," said Ben Kwong, chief operating officer, KGI Asia.