7 November 2017 Hotels / Leisure / Gaming Wynn

Deutsche Bank Markets Research

Rating Company Date Buy 7 November 2017 Forecast Change Asia Hong Kong Reuters Bloomberg Exchange Ticker Price at 6 Nov 2017 (HKD) 20.70 1128.HK 1128 HK HSI 1128 Price target - 12mth (HKD) 25.70 52-week range (HKD) 21.10 - 11.20 HANG SENG INDEX 28,604 Winner in Macau; Top pick Valuation & Risks

Karen Tang Best Macau play on high-end demand growth in 2018 We're increasingly confident in our bullish view on Macau's VIP & premium mass Research Analyst for 2018. Recent conversations with junkets & hosts highlight that Wynn Macau +852-2203 6141 would be the biggest beneficiary of this high-end demand growth. Wynn Macau remains as our top pick for 4 reasons: (1) Junket expansion should keep VIP Key changes TP 25.00 to 25.70 2.8% market share at Wynn Peninsula resilient; (2) 's mass table yield has ↑ Sales (FYE) 35,373 to ↓ -0.3% plenty of room for growth; (3) EBITDA margin on an uptrend as 3Q17 showed 35,269 comps ratio falling; and (4) Strong FCF allows for potential special dividends. Op prof margin - ↓ -0.2% We now expect Wynn Macau to grow property EBITDA by 13% to US$1.50bn in (FYE) 2018, or 8% above consensus. Lift 2018 EBITDA & TP by 2-3% to HK$25.7 (20% Net profit (FYE) 3,754.3 to ↓ -0.8% 3,724.5 upside potential). Reiterate Buy. Source: Deutsche Bank

VIP strength - Existing junkets expanding; new junkets joining Price/price relative This year, Wynn has been the biggest beneficiary of Macau's VIP resurgence -- 30 its VIP share now stands at 21%, almost 2x from 12% before Palace opened (see 20 charts). But recently, some investors have become concerned that the tide might 10 be turning as Wynn's VIP roll declined 2% qoq in 3Q while the market's VIP GGR 0 grew 8% qoq. Channel checks with junkets suggest that this fear is misplaced Jan '16 Jul '16 Jan '17 Jul '17 and the decline looks to be temporary. On-the-ground visits confirm that Wynn Wynn Macau HANG SENG INDEX (Rebased) Peninsula is moving a big junket (Tak Chun) to a larger VIP room, allowing it to expand from 8 tables to 14 by mid-Nov. In addition, by early Dec, a mid-sized Performance (%) 1m 3m 12m junket (MegStar, already at Palace) will open its VIP room at Wynn Peninsula Absolute 1.0 27.5 86.5 (see table). As junkets typically bring liquidity to new VIP rooms, Wynn should HANG SENG INDEX 0.5 3.8 26.3 continue to benefit. Source: Deutsche Bank Key indicators (FY1) Wynn Palace's mass potential still under-appreciated ROE (%) 139.0 Wynn Palace has finally ramped up its mass table yield to US$10.5k/table/day Net debt/equity (%) 916.6 in 3Q17, +14% qoq. This is good. But we feel Wynn Palace's mass segment Book value/share (HKD) 0.56 has much more potential as its mass table drop was still 19% lower than Price/book (x) 37.0 Wynn Peninsula's. Encouragingly, hosts told us that the new series of exclusive Net interest cover (x) 4.6 events, e.g. Canto pop concerts, wine & whisky dinners, are attracting premium Operating profit margin (%) 15.4 mass players (see table). As such, we believe Wynn Palace's mass table drop Source: Deutsche Bank can catch up to Wynn Peninsula's level by 2019 (see chart), esp after more F&B options are added after CNY2018. Better still, 3Q17 results confirmed that Wynn Palace is ramping up premium mass without many more promotional allowances. At Wynn Palace, comps ratio fell for 5 consecutive quarters from 25.0% of mass table GGR in 3Q16 to 16.3% by 3Q17 (see chart), and opex remained stable at US$1.5m/day. This suggests the EBITDA margin should be on an uptrend with

Deutsche Bank AG/Hong Kong Distributed on: 07/11/2017 11:45:13 GMT Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 083/04/2017. 0bed7b6cf11c 7 November 2017 Hotels / Leisure / Gaming Wynn Macau further premium mass ramp-up. Our 2018-19 EBITDA forecasts for Wynn Macau are 8% higher than consensus (see table).

Strong free cash flows allow for potential special div On back of a 60% jump in EBITDA, we forecast Wynn Macau's FCF should grow 27% yoy to US$6.3bn in 2017. This puts the stock at 6% 2017F and 7% 2018F FCF yield, a very attractive valuation. See chart. This also allows leverage (gross debt to EBITDA) to fall from 6.3x as of end-2016 to only 3.6x by end-2017, on our estimates. This gives the company the capacity to pay a large special div at year-end. For 2017, we assume a 90% payout, implying HK$0.7 DPS, including special dividends.

Southbound Chinese investors increasing interest Southbound investors are mainland Chinese investors in HK-listed stocks not covered under the "Qualified Domestic Institutional Investor (QDII) scheme". Since the start of this year, Wynn Macau has seen the most increase in Southbound investor holdings within the Macau sector. Wynn Macau's holding by Southbound investors increased from 1.4% of free float in January to 4.7% by October. See chart.

Attractive valuation trading at 7% 2018E FCF yield; risks We raise Wynn Macau's 2018F EBITDA by 2%. We also raise our SOTP TP by 2% to HK$25.7, implying 20% upside potential. We find Wynn Macau's current valuation attractive at 7% 2018 FCF yield. On an earnings basis, Wynn Macau is trading on 13x 2018F DB EV/EBITDA or 19x 2018F DB P/E. Risks include i) an abrupt end to VIP GGR growth, ii) tightened capital controls and credit environment in , and iii) lack of flow through from top line to EBITDA.

Forecasts and ratios Year End Dec 31 2015A 2016A 2017E 2018E 2019E Sales (HKDm) 19,096.4 22,099.5 35,268.8 40,117.8 40,987.4 EBITDA (HKDm) 4,681.2 5,105.4 8,182.4 9,761.7 10,370.0 Reported NPAT (HKDm) 2,410.4 1,435.5 3,724.5 5,658.9 6,307.4 Reported EPS FD(HKD) 0.46 0.28 0.72 1.09 1.21 DB EPS FD(HKD) 0.56 0.47 0.78 1.09 1.21 OLD DB EPS FD(HKD) 0.56 0.47 0.78 1.07 – % Change 0.0% 0.0% -0.6% 2.2% – DB EPS growth (%) -57.2 -15.3 64.6 40.4 11.5 PER (x) 26.7 24.0 26.7 19.0 17.1 EV/EBITDA (x) 21.7 17.3 16.4 13.3 12.2 DPS (net) (HKD) 0.60 0.42 0.70 1.03 1.15 Yield (net) (%) 4.0 3.7 3.4 5.0 5.6 Source: Deutsche Bank estimates, company data

Page 2 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Biggest beneficiary of this year's GGR recovery in Macau

Year-to-October, Macau's GGR has grown 19% yoy, surprising all Street expectations. Wynn has been the biggest beneficiary of this GGR recovery in Macau. Since it opened Wynn Palace in August 2016, the company's GGR market share has grown from 11% to 16%, while its VIP market share has grown from 17% to 21%.

But recently, some investors have become concerned that Wynn's strength with junkets might be coming to an end as Wynn's VIP rolling declined 2% qoq in 3Q while the market's VIP GGR grew 8% qoq. We spoke with all the big and mid-sized junket operators in Macau, and our conclusion is that investor fears are misplaced and Wynn's decline in VIP market share is temporary.

Figure 1: Wynn Macau's VIP GGR share Figure 2: Wynn Macau's Mass GGR share US$m US$m 1,200 22% 23% 25% 22% 21% 21% 11% 21% 21% 21% 21% 600 11% 11% 11% 11% 11% 11% 12% 1,000 10% 10% 17% 20% 16% 500 10% 800 8% 7% 7% 15% 400 8% 11% 600 300 6% 482 933 960 941 946 960 10% 439 468 463 470 860 200 381 391 410 4% 400 773 818 354 609 100 248 235 257 2% 471 486 5% 200 379 - 0% - 0%

Mass-table GGR (LHS) Mass-table Market Share (RHS) VIP GGR (LHS) VIP GGR Market Share (RHS)

Source: Deutsche Bank forecast, Company data Source: Deutsche Bank forecast, Company data

Figure 3: Wynn Macau's Total GGR market share Figure 4: Wynn Macau's EBITDA share US$m US$m 17% 17% 17% 17% 1,800 16% 16% 16% 18% 400 16% 16% 16% 16% 16% 16% 18% 15% 15% 15% 1,600 14% 16% 350 16% 13% 13% 13% 1,400 12% 11% 14% 300 14% 10% 1,200 10% 12% 250 12% 1,000 10% 10% 200 800 8% 363 360 363 372 8% 1,454 1,512 1,491 1,505 1,535 321 344 600 1,226 1,283 1,348 6% 150 293 298 6% 1,023 226 100 191 190 400 682 744 794 4% 177 4% 200 2% 50 2% - 0% 0 0%

Total GGR (LHS) Total GGR Market Share (RHS) Property EBITDA (LHS) EBITDA Market Share (RHS)

Source: Deutsche Bank forecast, Company data Source: Deutsche Bank forecast, Company data

Wynn Palace's mass has scope for a further ramp up

After two quarters of disappointment, Wynn Palace's mass table yield had finally caught up to Macau's average by 2Q17, and then successfully further ramped up another 14% qoq to US$10.5k/table/day by 3Q17. By 3Q17, Wynn Palace's mass

Deutsche Bank AG/Hong Kong Page 3 7 November 2017 Hotels / Leisure / Gaming Wynn Macau table yield is only 8% below that of Wynn Peninsula, which we believe is among the highest in Macau.

More F&B selections, better floor plan According to management, Wynn Palace's ramp was in both premium and grind mass segments. For grind mass, Wynn Palace added family-oriented F&B outlets at more affordable mid-range price points over the summer 2017. By 2018, Wynn Palace will also move the popular Red 8 Noodle shop to another location, adding a café on the mass gaming floor. We believe these floor reconfigurations can improve traffic and feel of the mass gaming floor.

On the gaming floor, the casino has also rearranged tables to concentrate traffic and create more intimacy. Crowds are more concentrated at the entrances of the casino and right outside the premium mass Diamond room.

The property also started benefiting from improved bus connections and its proximity to the newly-opened Ferry terminal. Another silver lining is MGM Cotai construction activity should alleviate in late 2017, reducing some of the construction noise outside the property.

Figure 5: Wynn Palace mass table yield growth outpaces Figure 6: Wynn Palace mass table yield quickly catching sector average up with Wynn Peninsula Wynn Palace mass table yield Macau avg (US$000/table/day) (US$000/table/day) 4q17: Wynn Palace mass table yield can catch up with Peninsula property 16.0 16.0 50% 14.0 11% (3%) 0% 14.0 14.0 (23%) 0% 12.2 (36%) (24%) (8%) 11.6 (58%) 12.0 10.5 12.0 (50%) 9.2 (100%) 10.0 8.4 8.8 10.0 7.6 (150%) 8.0 9.5 7.4 8.9 9.3 8.0 8.3 8.8 14.0 (200%) 6.0 4.7 6.0 12.21 2.2 12.6 11.1 11.6 11.4 11.9 (250%) 4.0 4.0 7.4 (300%) 2.0 2.0 (350%)

- - (400%)

4Q16 3Q17

3Q16 2Q17 1Q17 2019E

2018E Wynn Palace mass table yield Wynn Peninsula mass table yield 4Q17E

Source: Deutsche Bank forecast, Company data Source: Deutsche Bank forecast, Company data

Page 4 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 7: Wynn Palace mass table drop is still catching up with Peninsula

(US$bn) Wynn Palace mass table drop has further room to ramp while Wynn 1.4 Peninsula volume stays stable 50% 2% (14%) 0% 1.2 (32%) (32%) (19%) (9%) (75%) (34%) (50%) 1.0 (100%) 0.8 (150%) 0.6 (200%) 1.1 1.1 1.0 (250%) 0.4 0.9 0.7 (300%) 0.2 0.3 (350%) - (400%)

Wynn Palace mass table drop Wynn Peninsula mass table drop

Source: Deutsche Bank forecast, Company data

For premium mass, Wynn launched a series of monthly exclusive events and concerts (up to 1,000 guests) for its top customers. Management feels players are now becoming more sticky to Wynn Palace after 2-3 trips over CNY & Golden Week.

Figure 8: Wynn has started to host exclusive events for VIPs and premium mass players regularly

Source: Wynn Macau facebook page

Promotional allowances stayed in check A look at the detailed 3Q results revealed that Wynn Palace's comps stayed stable at US$37-40m per quarter since 4Q16. All this while mass table GGR has risen 22%, bringing the comps ratio from 21.6% in 4Q16 down consistently for 4 quarters to now only 16.3% in 3Q17 (Wynn Peninsula 12.9%, Sands China 11.6% but rising). On the call, management reiterated that competition continues to stay very measured in promotional activity.

With mass ramp up, operating leverage will further lift Wynn Palace's EBITDA margin. In the meantime, the comp ratio (promotional allowances as % of mass GGR) in Cotai have been falling as the property gains traction amid mass market customers.

Deutsche Bank AG/Hong Kong Page 5 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 9: EBITDA margin on an uptrend Figure 10: Promotional allowances as % of mass GGR at Wynn Palace falling

30% Wynn Palace Wynn Peninsula 25% 31% 25% Wynn 22% Peninisula 20% 29% 20% 18% 17% 16% 16% 15% 27% 15% Company 15% 25% 14% 14% 14% 14% 14% 14% 10% 13% 13% 13% 13% 13% 13% 13% 23% 5% Wynn 21% Palace 0% 19%

17%

15% 4Q16 1Q17 2Q17 3Q17 4Q17E 2018E 2019E

Source: Company data, Deutsche bank estimates Source: Company data, Deutsche Bank estimates.

Wynn - The preferred brand by VIPs

Key beneficiary of Macau's VIP resurgence Wynn Macau is a key beneficiary of Macau's VIP resurgence. Big and small junket operators alike, are keen to open rooms at the company's two facilities. Management believe it is benefiting more than competitors because Wynn’s products & services are very attractive to high-end customers.

Further opportunities to add junkets In 3Q17, over 20 junket rooms were opened in Macau, of which 6-7 were by new junkets. As junket liquidity remains abundant, we believe the Big 4 junkets will also likely step up their VIP room opening schedule over the next few months.

Wynn Macau's existing junket operators are expanding. In Wynn Peninsula, Tak Chun junket will expand from 8 tables to 14 tables. MegStar, a medium-size junket operator which opened a room in Wynn Palace in May 2017, will also open in Wynn Peninsula in Dec 2017.

...and it is not driven by credit provided by the company Wynn CFO cited on 1Q17 earnings call that, even though the two properties generated US$8.5m VIP GGR per day in 1Q17, similar to the mid-2014 level, advances to junkets are less than half of the previous level.

Page 6 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 11: New VIP room openings since August 2016 Date Company Casino Junket Operator Size Aug-16 Wynn Wynn Palace SunCity Top junket Aug-16 Wynn Wynn Palace Tak Chun Top 3 junket Aug-16 Wynn Wynn Palace Guangdong Top 3 junket Sep-16 Sands China Parisian SunCity Top junket Sep-16 Sands China Parisian Tak Chun Top 3 junket Sep-16 Sands China Parisian Guangdong Top 3 junket Nov-16 Macau Cotai SunCity Top junket Nov-16 Macau Cotai Tak Chun Top 3 junket Mar-17 Sands China Parisian MegStar Mid-sized junket Mar-17 Wynn Wynn Peninsula David Group Mid-sized junket May-17 Macau Cotai David Group Mid-sized junket May-17 Wynn Wynn Palace MegStar Mid-sized junket Jun-17 SJM Satellite casino (L'Arc) Qian Jin VIP Small junket Jun-17 SJM Satellite casino (Oriental) Eastern Club Small junket Jul-17 SJM Satellite casino (Legend Palace) Benny Club Small junket Aug-17 Galaxy David Group Mid-sized junket Aug-17 SJM Satellite (various) 10 small junkets Small junket Aug-17 Sands China Venetian 2-3 small causal junkets Small junket Sep-17 Galaxy Galaxy Macau 2-3 small causal junkets Small junket Oct-17 SJM Satellite casino (Legend Palace) Ka Sing Club Small junket Nov-17 Wynn Wynn Peninsula Tak Chun expanding Top 3 junket Dec-17 Wynn Wynn Peninsula MegStar Mid-sized junket Dec-17 MGM China MGM Peninsula Tak Chun Mid-sized junket Total 40 new junket VIP rooms in Macau since August 2016

Source: Deutsche Bank, various news sources (Macau Daily, GGR Asia)

Figure 12: Wynn Macau VIP roll market share Figure 13: VIP GGR market share 23% 25% Wynn Palace opened 23% 22% 25.0% 22% 22% 21% 22% 22% 21% 21% 21% 21% 19% 20% 20.0% 16% 17% 16% 15% 13% 13% 15.0% 11% 12% Wynn Palace 10% 10.0% Wynn Peninsula

5% 5.0%

0% 0.0%

Source: Deutsche Bank forecasts, Company data Source: Deutsche Bank forecasts, Company data

Deutsche Bank AG/Hong Kong Page 7 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 14: Wynn Palace rolling exceeded Wynn Peninsula in 3Q17

(US$bn)

18.0 14.2% 50.0% (27.6%) 10.7% 16.0 2.4% 9.2% 0.0% (16.9%) 14.0 (50.0%) 12.0 (62.1%) (4.3%) (100.0%) 10.0 (150.0%) 8.0 15.3 15.9 15.6 (200.0%) 13.7 14.0 14.4 13.7 6.0 13.3 13.4 (250.0%) 10.9 10.8 11.0 4.0 (300.0%) 2.0 4.2 (350.0%) - (400.0%)

Wynn Palace Wynn Peninsula

Source: Deutsche Bank forecasts, Company data

Figure 15: Company EBITDA mix Figure 16: 2018e EBITDA mix

100%

90%

80% Non gaming 70% Non gaming, 60% 17% VIP, 50% Mass (tables+slot) 32% 40%

30% VIP 20%

10%

0% 2013 2014 2015 2016 2017E 2018E 2019E Mass (tables+slot), 51%

Source: Deutsche Bank forecasts, Company data Source: Deutsche Bank forecasts, Company data

Strong FCF allows for potential dividend hike

On the back of a 60% jump in EBITDA, we forecast Wynn Macau's FCF will grow 27% yoy to US$6.3bn in 2017. This puts the stock at 6% 2017F and 7% 2018F FCF yield, a very attractive valuation. See chart.

We think Wynn Macau has the capacity to raise dividends through 2017-2019, given i) the company's leverage (gross debt to EBITDA) can reduce from 6.3x as of Dec-2016 to only 3.6x by Dec-2017 based on our estimates; and ii) for fiscal 2017, company resumed its interim dividend, paid semi-annually as before 2014

Page 8 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

With little capex required for Macau, we think the company can maintain a dividend payout ratio at 90% for FY17 and lift it to 95% for FY18.

On current share price, this implies an attractive dividend yield of 3.4% for 2017 and above 5.0% for 2018.

Figure 17: Company leverage is reducing

HK$m Net Debt Net Debt/EBITDA (x) 35,000 8.0 7.0 30,000 7.6 6.8 7.0 6.9 6.0 25,000 6.4 5.0 20,000 5.4 5.2 4.7 4.0 15,000 4.1 3.0 3.5 3.6 10,000 3.0 2.0 2.8 2.5 5,000 2.0 1.0 - 0.0

Source: Company data, Deutsche Bank forecasts

Figure 18: Operating cash flow continues to rise, on end Figure 19: Free Cash Flow rebounds in 2017 of capex cycle US$m US$m 2,000 Operating 1,500 Cash Flow 1,000 1,000 EBITDA 500 - - (500) 2013 2014 2015 2016 2017E 2018E 2019E Capex (1,000) (1,000) (1,500) (2,000) (2,000)

Source: Company data, Deutsche Bank forecasts Source: Company data, Deutsche Bank forecasts Note: FCF figure is before paying for dividend

Figure 20: Wynn Macau dividend payout can reach 95% in 2018, on our estimates HK$/share 2016 2017E 2018E 2019E 2020E Interim - 0.21 0.21 0.21 0.21 Final 0.42 0.21 0.21 0.21 0.21 Special - 0.28 0.61 0.73 0.78 DPS 0.42 0.70 1.03 1.15 1.20 yoy (30%) 66% 48% 11% 4%

Dividend yield 2.0% 3.4% 5.0% 5.6% 5.9% Dividend / EBITDA 42.7% 44.3% 55.1% 57.8% 59.3% Dividend / Net Income 89.4% 90.3% 95.0% 95.0% 95.0%

Source: Company data, Deutsche Bank forecasts, as of 6 Nov 2017 Note: DB net income after adjusting for non recurring items is used for payout calculation

Deutsche Bank AG/Hong Kong Page 9 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 21: Wynn Macau is offering attractive yield, and still growing HK$/share 2.0 8.0% 8.5% 7.4% FCF yield 1.8 7.5% 1.6 5.9% 5.6% 6.5% 1.4 5.0% Div yield 4.6% 5.5% 1.2 4.5% 1.0 3.4% 2.9% 3.5% 0.8 2.0% 0.6 2.5% 1.0 1.2 DPS 0.4 1.5% 0.6 0.7 0.2 0.4 0.5% - -0.5% 2015 2016 2017E 2018E 2019E

Source: Company data, Deutsche Bank forecasts as of 6 Nov 2017 Free cash flow is after paying for interest expense, before dividend

Figure 22: Wynn Macau and dividend calendar

Source: Company data

Southbound mainland Chinese investor interest continues to lend support

Southbound investors are mainland Chinese investors in HK-listed stocks not covered by the "Qualified Domestic Institutional Investor (QDII) scheme". These include retail mainland Chinese investors and some domestic Chinese mutual funds. Since the start of this year, Wynn Macau has seen the highest increase in Southbound investor holdings within the Macau sector. Wynn Macau's holding by Southbound investors increased from 1.4% of free float in January to 4.7% by October.

Page 10 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 23: Southbound interest now makes up 5% of Figure 24: Southbound net buying (US$m) Wynn Macau's free float Southbound holding as % free float market cap (2017 YTD) 12.0%

10.0% SJM, 10%

8.0% Wynn has gained the most 6.0% interest in the year Wynn, 5% 4.0% MGM, 4% 2.0% Sands, 1%

0.0% Galaxy, 1%

Jul-17

Jul-17

Jul-17

Jan-17

Jan-17

Jan-17

Jun-17

Jun-17

Oct-17

Oct-17

Apr-17

Apr-17

Feb-17

Feb-17

Sep-17

Sep-17

Aug-17

Aug-17

Mar-17

Mar-17

May-17 May-17

Source: Hong Kong Central Clearing and Settlement System, as of 27 Oct 2017 Source: Deutsche Bank, Hong Kong Central Clearing and Settlement System, as of 27 Oct 2017 Note:Southbound holding as % of company free float market cap

Consensus still too low

Our 2018-19 EBITDA forecasts for Wynn Macau are 8% higher than consensus. This reflects the Street’s lack of confidence in continued VIP strength amid China’s tightening macro credit conditions. We expect more upgrades over the next months.

Figure 25: DB Forecast vs. FactSet consensus

DB vs. DB vs. Consensus Consensus Consensus Consensus Revenue (HK$m) 38,010 40,166 6% 40,280 41,034 2% EBITDA (HK$m) 9,067 9,762 8% 9,630 10,370 8% EPS (HK$) 0.92 1.09 18% 1.03 1.21 17% DPS (HK$) 0.82 1.03 27% 0.84 1.15 38%

Source: Deutsche Bank estimates, Factset

Figure 26: Earnings revision

(HK$m) New Old % Change New Old % Change Revenue 35,269 35,373 0% 40,118 39,661 1% EBITDA 8,182 8,208 0% 9,762 9,557 2% DB Net Profit 4,019 4,045 -1% 5,659 5,535 2%

Source: Deutsche Bank estimates

Reiterate Buy, raise TP to HK$25.7

Reiterate Buy. We raise Wynn Macau 2018E EBITDA by 2%. Maintain target multiple at 16x, second highest in the sector, just below Sands China. Our target price is slightly raised to US$25.7. At the current price, the stock yields 3.4%.

Risks include i) Abrupt end to VIP GGR growth, ii) tightened capital control and credit environment in China, iii) lack of flow through from top line to EBITDA.

Deutsche Bank AG/Hong Kong Page 11 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 27: Wynn Macau SOTP: HK$25.7 2018E EBITDA Valuation HK$m (x) (HK$m) (HK$/shr) Wynn Macau & Encore 6,037 16 96,289 18.5 Wynn Palace 5,270 16 84,062 16.2 Corp overhead (mainly mgmt and (1,546) 16 (24,651) (4.7) Net debt (end-2018) (22,361) (4.3) Target valuation 9,762 133,339 25.7 No of shares (m) 5,196

Source: Deutsche Bank forecast, Company data

Figure 28: Wynn Macau shareholder structure

Elaine Wynn Free float

9.4% 11.8% 78.8%

Wynn Resorts Ltd Free (WYNN US) float 72%

Wynn Macau Ltd 28% (1128.HK) 100% economic interest Gaming concession

Wynn Macau Wynn Palace & Encore in Cotai

- Opened Sept 2006 - Opened Sept 2016 - Encore extension - Capex US$4.1bn opened in April 2010 - 350 tables & 1,700 rooms - 500 tables - Phase 2 (Wynn Diamond) - 900 slots to have all suite hotel & - 1,000 hotel rooms other non-gaming

Source: Company data, Bloomberg Finance LP

Page 12 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 29: Wynn Macau consensus 12m fwd EV/ Figure 30: Sector consensus 12m forward EV/EBITDA EBITDA trading range 20.0 18

16 +1 Std div 14 +1 Std Dev 15.0 Avg 14.3x 12 Avg 12.4x -1 Std Div -1 Std Dev 10 10.0 8

6

5.0

Jul17

Jul16

Jul15

Jul14

Jul13

Jul12

Jul11

Jul10

Jul09

Jan17

Jan16

Jan15

Jan14

Jan13

Jan12

Jan11 Jan10

Source: Deutsche Bank, Bloomberg Finance LP Source: Deutsche Bank, Bloomberg Finance LP

Figure 31: What drives multiple expansion? GGR Figure 32: Macau share price vs GGR yoy momentum

90% Macau GGR yoy (LHS) 20.0 400 Macau Share Price Index (LHS) 120% 12m fwd consensus EV/EBITDA (RHS) 350 Macau GGR yoy (RHS) 100% 70% DBe 18.0 80% 50% 300 16.0 60% 250 30% 40% 14.0 200 10% 20% 150 12.0 0% -10% 100 -20% -30% 10.0 50 -40%

-50% 8.0 - -60%

Jul-11

Jul-16

Jan-09

Jan-14

Jun-09

Jun-14

Oct-12

Oct-17

Apr-10

Apr-15

Feb-11

Feb-16

Sep-10

Sep-15

Dec-11

Dec-16

Aug-13

Nov-09

Nov-14

Mar-13

May-12

May-17

07-2018

01-2018

07-2017

01-2017

07-2016

01-2016

07-2015

01-2015

07-2014

01-2014

07-2013

01-2013

07-2012

01-2012

07-2011 01-2011

Source: DICJ, Bloomberg Finance LP Source: Deutsche Bank, Bloomberg Finance LP DB Macau Index = Market cap weighted share price index of the six gaming concessionaires in Macau

Figure 33: Macau sector valuation Shr price as: Ticker Rec Price Mkt EV/EBITDA P/E EBITDA EPS EPS Div FCF Yield cap growth Growth CAGR Yield Post capex local cur US$m Macau Galaxy 0027.HK Hold 54.70 29,975 15.2 13.5 13.5 24.2 20.7 20.2 34% 12% 2% 53% 17% 2% 9% 1.2% 1.7% -1.1% MGM China 2282.HK Buy 18.50 9,010 21.6 14.7 13.2 28.7 25.7 21.5 -4% 45% 8% -18% 11% 20% 15% 1.5% 1.3% 6.8% Sands China 1928.HK Hold 37.50 38,790 16.6 15.6 15.6 25.6 22.9 22.5 13% 7% 1% 11% 12% 2% 7% 5.3% 4.8% 4.2% SJM 0880.HK Hold 6.58 4,771 13.7 14.8 7.9 18.8 19.3 17.5 -6% -1% 82% -12% -3% 10% 3% 3.0% -4.8% 6.5% Wynn Macau 1128.HK Buy 20.70 13,784 16.3 13.7 12.6 26.5 19.4 17.4 61% 16% 6% 66% 36% 12% 24% 3.4% 7.2% 7.8% Average

Source: Deutsche Bank, FactSet

Deutsche Bank AG/Hong Kong Page 13 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 34: Absolute share price performance Ticker Mkt Cap Absolute perf % from % from L3M T/O Beta 06-11-17 local cur YTD 4QTD L3M hi L3M low US$m Macau Galaxy 0027.HK 29,975 54.70 62% 4% -1% 19% -21% 27% 16% 26% 11% 16% -1% -3% 19% 76.1 1.3 MGM China 2282.HK 9,010 18.50 15% 4% 3% 22% -15% 34% 19% 1% 7% 8% -1% -2% 22% 15.6 1.1 Sands China 1928.HK 38,790 37.50 11% 1% -5% 19% -18% 30% 0% 7% -1% 14% -8% -8% 10% 59.9 1.2 SJM 0880.HK 4,771 6.58 8% -3% -6% 0% -15% 21% 7% 4% 30% -13% -8% -11% 0% 8.5 1.0 Wynn Macau 1128.HK 13,784 20.70 68% 2% 1% 32% -7% 15% -4% 28% 15% 15% -2% -2% 28% 22.9 1.2 Macau Average -17% -2% -5% 4 2.2 1.2

Source: Deutsche Bank, FactSet

Page 14 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau Macau industry outlook for 2018-19

VIP likely still growth driver for 2018

We expect another around of consensus upgrades soon: DB forecasts 2018 GGR +13% (vs consensus +9%).

We feel that the Street still underestimates the VIP potential. Consensus forecasting 2018 VIP GGR to grow only 8% (vs DBe 2018 VIP GGR +15%). We believe the Big 4 junkets will again step up their VIP room opening schedule over the next few months. The upcoming schedule includes one new junket operator in Wynn Peninsula and another one expanding. MGM Peninsula will also add a big junket before year-end.

Figure 35: 2017 GGR to grow 18%, 17-19E CAGR +10% DB forecasts: (US$bn) 2017 GGR +18% 12.512.8 2018 GGR +13% 12.0 11.1 11.4 10.710.8 2019 GGR +7%10.6 10.4 10.2 10.1 10.09.9 9.9 10.0 9.29.3 9.3 9.3 9.4 9.3 8.8 8.88.9 8.8 8.4 Slot 8.2 8.1 7.9 7.6 7.9 8.0 7.3 6.9 7.16.8 6.9 7.0 6.9 6.5 5.65.9 Mass 6.0 5.1 table 4.5 4.0 3.73.6 4.0 3.23.0 3.3 3.2 VIP

2.0

-

3Q17

1Q17

3Q16

1Q16

3Q15

1Q15

3Q14

1Q14

3Q13

1Q13

3Q12

1Q12

3Q11

1Q11

3Q10

1Q10

3Q09

1Q09

3Q08

1Q08

3Q19E

1Q19E

3Q18E 1Q18E

Source: Deutsche Bank forecast, Government data

We expect Macau's Mass GGR to grow by 9% in 2018. Though we think growth of mass gaming spend per visitor is likely to decelerate, this will be compensated for by visitor growth. Visitor growth to Macau could jump to a level unseen since 2014, as the Hong Kong-Zhuhai-Macau bridge starts full operation at the end of 2018.

Deutsche Bank AG/Hong Kong Page 15 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 36: Mass gaming spend per visitor growth risks decelerating Early 2014: Slowing mass gaming spend per visitor growth predicted overall mass GGR DBe 50% growth slowing 39% 2019: HKZM bridge 40% 32% 2Q17: Again, slowing mass spend starts operation 9% per visitor growth is pointing to 30% 7% overall mass GGR slowing 20% 16% 15% 12% 14% 13% 30% 10% 11% 25% 6% 9% 9% 10% 5% 0% 3% 6% 5% 2% 5% 5% 10% 10% 9% 9% 9% 11% 9% 8% 6% 6% 4% 0% -1%3% -1% 0% -8% -17% -16% -2% -10% -22% -21% -2% -10% Mass gaming spend per visitor yoy -4% -20% -10% -19% -2% -3% Visitor arrivals yoy

-30% -25% -22%

2Q17

1Q17

4Q16

3Q16

2Q16

1Q16

4Q15

3Q15

2Q15

1Q15

4Q14

3Q14

2Q14

1Q14

2019E

2018E

4Q17E 3Q17E

Source: DICJ, Government data, Deutsche Bank forecasts

Overall, Macau's gaming demand should continue to outpace supply, which will grow at only 3% CAGR going forward. Casino operators' margins will be further lifted thanks to operating leverage.

Figure 37: Macau table supply to grow by 2% CAGR over 2017-2020F

New casinos: 1) Wynn Palace Sands Cotai Galaxy SJM Lisboa # of year end tables Sands 2) Sand Cotai Central Macau Cotai Palace 8,000 Central Ph2 Ph2 Ph1 Galaxy Macau 7,000 Ph 1 Wynn Macau 6,626 6,651 6,000 6,233 6,377 6,478 5,750 5,711 5,990 5,485 SJM 5,000 5,302 4,770 4,791 4,000 4,017 MGM China

3,000 Sands China 2,000

1,000 Galaxy

0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017E 2018E 2019E 2020E

Source: Deutsche bank estimates, Company data

Premium mass growth also accelerating

DB proprietary table count Once a month, we spend 8 hours on a Friday afternoon/evening tallying minimum table limits on all the baccarat tables in the Big 10 casinos in Macau. On every occasion, we now count over 1,900 mass gaming tables, including those in the premium mass areas.

Year-to-September, we noted that Macau’s average minimum bets in the Big 10 casinos have grown 7%. One of the reasons was that the percentage of baccarat tables with over HK$2,000 in minimum bets has grown from 36% in summer 2016 to 40% by Sept 2017.

Page 16 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 38: Portion of premium mass tables increasing Figure 39: Macau's average min bets continues to rise, +7% ytd

HK$ 2,500 100% 2,358

29% Premium 36% 2,000 1,803 80% 40% Mass (HK$2k or above) 1,701 1,430 1,500 60%

Middle Mass 1,000 (HK$1.0-1.5k) 40% 500

20% -

Grind Mass

May…

May…

Sept… Sept… (≤HK$800) Sept…

0% 2016 Jul

Jan Jan 2016

Jan 2013 Jan

Apr 2017 Apr

Apr 2016 Apr

Jun 2017 Jun

Jun 2012 Jun

Jun 2013 Jun

Jun 2016 Jun

Jun 2015 Jun

Oct 2012 Oct

Feb 2017 Feb

Sep 2017 Sep

Sep 2016 Sep

Sep 2015 Sep

Mar 2016 Mar

Mar 2015 Mar

Aug 2017 Aug

Aug 2014 Aug

Dec 2016 Dec

Dec 2014 Dec

Dec 2013 Dec

Nov 2012 Nov

Nov 2014 Nov

Jul 2013 Jul

Jul 2016

Jan 2013 Jan Jan 2016 Jan

Apr Apr 2016

Apr Apr 2017

Jun 2016 Jun

Jun 2017 Jun Jun 2012 Jun Jun 2013 Jun 2015 Jun

Oct 2012 Oct

Feb 2017 Feb

Sep 2015 Sep

Sep 2017Sep

Sep 2016Sep

Mar 2015 Mar 2016 Mar

Aug 2017 Aug

Aug 2014 Aug

Dec 2013 Dec Dec 2014Dec

Dec 2016Dec

Nov 2014 Nov Nov2012

Jul 2013 Jul

May 2014 May

May 2017 May

Sept 2012 Sept 2013 Sept 2014 Sept

Source: Deutsche Bank proprietary table count Source: Deutsche Bank proprietary table count

VIP growth supported by strong Chinese Tier-3 property prices

Many investors are concerned about Chinese government’s restriction policies on the property market, and the potential impact on Macau’s VIP GGR as property prices in Tier-1 cities have softened in recent months. However, we want to highlight our analysis below which shows that Tier-1-city property prices have a very low correlation with Macau's VIP GGR. Instead, Tier-3-city property prices have a very high (75%) correlation with Macau's VIP GGR. According to junket agents we spoke to, they said that their biggest VIP players are often those who recently became super rich in small cities and not the established rich in Tier 1 cities. In our view, this is because VIP bet size is mostly related to how fast someone became rich recently, i.e. the second derivative of wealth creation, and not how rich the person is.

According to our China property analyst, as China's government has tightened home purchase restrictions in Tier 1&2 cities, demand for property has spread to select Tier 3 cities. This is positive for Macau's VIP GGR.

Figure 40: China 1st-tier-city property prices don’t have Figure 41: … instead, China’s third-tier-city property any correlation with Macau VIP GGR… prices have a very high correlation with Macau VIP GGR China Tier-1 city property price yoy (LHS) China Tier-3 city property price yoy (LHS) 40% Macau VIP GGR yoy (RHS) 60% 10% Macau VIP GGR yoy (RHS) 60% 8% 40% 40% 30% 6%

20% 4% 20% 20% 2% 0% 0% 0% 10% -20% -2% -20%

0% -4% -40% -40% -5% correlation -6%

-10% -60% -8% 75% correlation -60%

Jul-11

Jul-12

Jul-13

Jul-14

Jul-15

Jul-16

Jul-17

Jul-17

Jul-16

Jul-15

Jul-14

Jul-13

Jul-12

Jul-11

Jan-11

Jan-12

Jan-13

Jan-14

Jan-15

Jan-16

Jan-17

Jan-17

Jan-16

Jan-15

Jan-14

Jan-13

Jan-12 Jan-11

Source: Macau government, National Statistical Bureau (NSB) price index of newly constructed Source: Macau government, National Statistical Bureau (NSB) price index of newly constructed residential buildings in the four Tier-1 cities in China. residential buildings in 70 large & medium-sized Tier-3 cities in China.

Deutsche Bank AG/Hong Kong Page 17 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 42: Macau VIP GGR vs. China's Keqiang Index Figure 43: China credit growth is slowing midly

China Credit Growth ( (LHS) VIP GGR yoy (RHS) Sharp tightening 130% 35% 110% 30% Sharp 90% 25% tightening Mild 70% tightening 20% 50% 30% 15% 10% 10% -10% 5% -30%

0% 77% correlation w/ 6-month lead -50%

Jul-17

Jul-16

Jul-15

Jul-14

Jul-13

Jul-12

Jul-11

Jul-10

Jul-09

Jul-08

Jul-07

Jan-17

Jan-16

Jan-15

Jan-14

Jan-13

Jan-12

Jan-11

Jan-10

Jan-09

Jan-08 Jan-07 China credit growth = Total social financing + Municipal bond issuance

Source:Government data, Wind Source: WIND, DICJ

Appendix

Page 18 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Figure 44: Wynn Macau financial summary

Source: Company data, Deutsche bank estimates

Deutsche Bank AG/Hong Kong Page 19 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Model updated: 06 November 2017 Fiscal year end 31-Dec 2014 2015 2016 2017E 2018E 2019E Running the numbers Financial Summary Asia DB EPS (HKD) 1.30 0.56 0.47 0.78 1.09 1.21 Reported EPS (HKD) 1.24 0.46 0.28 0.72 1.09 1.21 Hong Kong DPS (HKD) 1.75 0.60 0.42 0.70 1.03 1.15 Hotels / Leisure / Gaming BVPS (HKD) 1.4 0.8 0.5 0.6 0.9 1.1 Weighted average shares (m) 5,188 5,187 5,180 5,180 5,196 5,196 Average market cap (HKDm) 156,580 76,922 58,576 107,547 107,547 107,547 Wynn Macau Enterprise value (HKDm) 164,392 101,509 88,142 134,168 129,908 126,756 Reuters: 1128.HK Bloomberg: 1128 HK Valuation Metrics P/E (DB) (x) 23.2 26.7 24.0 26.7 19.0 17.1 Buy P/E (Reported) (x) 24.3 31.9 40.8 28.8 19.0 17.1 P/BV (x) 16.12 11.47 26.14 37.03 21.79 18.33 Price (6 Nov 17) HKD 20.70 FCF Yield (%) nm nm nm 6.8 8.3 8.9 Target Price HKD 25.70 Dividend Yield (%) 5.8 4.0 3.7 3.4 5.0 5.6 EV/Sales (x) 5.6 5.3 4.0 3.8 3.2 3.1 52 Week range HKD 11.20 - 21.10 EV/EBITDA (x) 19.5 21.7 17.3 16.4 13.3 12.2 EV/EBIT (x) 22.1 27.6 25.1 24.8 18.6 16.7 Market cap (m) HKDm 107,547 USDm 13,784 Income Statement (HKDm) Sales revenue 29,445 19,096 22,099 35,269 40,118 40,987 Company Profile Gross profit 8,423 4,681 5,105 8,182 9,762 10,370 Wynn Macau is one of the six gaming operators in Macau. It has EBITDA 8,423 4,681 5,105 8,182 9,762 10,370 two casinos: Wynn Macau in Peninsula and Wynn Palace in Cotai Depreciation 891 905 1,496 2,668 2,666 2,663 (opened in 2016). The two properties operate over 600 gaming Amortisation 95 95 95 95 95 95 tables, 1,900 slot machines and 160,000 square feet of high- EBIT 7,437 3,681 3,514 5,419 7,001 7,611 end retail space. Wynn Resorts (WYNN.OQ) owns 72% of the Net interest income(expense) -457 -564 -814 -1,175 -1,111 -1,067 company. Associates/affiliates 0 0 0 0 0 0 Exceptionals/extraordinaries -306 -476 -1,006 -295 0 0 Other pre-tax income/(expense) -205 -224 -246 -212 -218 -224 Profit before tax 6,469 2,417 1,448 3,737 5,671 6,320 Price Performance Income tax expense 24 6 12 12 12 12 25 Minorities 0 0 0 0 0 0 Other post-tax income/(expense) 0 0 0 0 0 0 20 Net profit 6,445 2,410 1,436 3,725 5,659 6,307 15 DB adjustments (including dilution) 306 476 1,006 295 0 0 10 DB Net profit 6,752 2,886 2,442 4,019 5,659 6,307 5 Jan '16 Jul '16 Jan '17 Jul '17 Cash Flow (HKDm)

Wynn Macau HANG SENG INDEX (Rebased) Cash flow from operations 5,758 2,480 5,843 8,143 9,749 10,358 Net Capex -8,329 -12,448 -6,660 -803 -803 -803 Margin Trends Free cash flow -2,572 -9,968 -817 7,341 8,947 9,555 Equity raised/(bought back) 0 0 0 0 0 0 30 Dividends paid -8,721 -5,455 -3,109 -3,273 -3,628 -5,376 25 Net inc/(dec) in borrowings 6,888 12,713 773 -2,688 131 -3,391 Other investing/financing cash flows -484 -1,351 -975 -1,122 -1,058 -1,027 20 Net cash flow -4,888 -4,061 -4,128 258 4,391 -239 15 Change in working capital -1,396 -1,509 2,115 -27 0 0 10 14 15 16 17E 18E 19E Balance Sheet (HKDm) EBITDA Margin EBIT Margin Cash and other liquid assets 10,792 6,731 2,604 2,862 7,252 7,013 Tangible fixed assets 21,170 32,951 37,641 35,680 33,722 31,766 Growth & Profitibility Goodwill/intangible assets 398 398 398 398 398 398 75 250 Associates/investments 0 0 0 0 0 0 Other assets 1,789 2,201 2,303 2,329 2,329 2,329 50 200 Total assets 34,150 42,282 42,945 41,269 43,702 41,507 25 150 Interest bearing debt 18,605 31,318 32,170 29,482 29,613 26,222 0 100 Other liabilities 8,501 6,861 8,323 8,883 9,154 9,418 -25 50 Total liabilities 27,106 38,179 40,492 38,365 38,767 35,640 -50 0 Shareholders' equity 7,044 4,102 2,453 2,904 4,935 5,867 14 15 16 17E 18E 19E Minorities 0 0 0 0 0 0 Total shareholders' equity 7,044 4,102 2,453 2,904 4,935 5,867 Sales growth (LHS) ROE (RHS) Net debt 7,812 24,587 29,566 26,621 22,361 19,208

Solvency Key Company Metrics 1000 20 Sales growth (%) -6.0 -35.1 15.7 59.6 13.7 2.2 750 15 DB EPS growth (%) -11.1 -57.2 -15.3 64.6 40.4 11.5 500 10 EBITDA Margin (%) 28.6 24.5 23.1 23.2 24.3 25.3 EBIT Margin (%) 25.3 19.3 15.9 15.4 17.5 18.6 250 5 Payout ratio (%) 140.9 129.1 151.6 97.1 95.0 95.0 0 0 ROE (%) 79.3 43.3 43.8 139.0 144.4 116.8 14 15 16 17E 18E 19E Capex/sales (%) 28.3 65.2 30.2 2.3 2.0 2.0 Capex/depreciation (x) 8.4 12.5 4.2 0.3 0.3 0.3 Net debt/equity (LHS) Net interest cover (RHS) Net debt/equity (%) 110.9 599.3 nm 916.6 453.1 327.4 Karen Tang Net interest cover (x) 16.3 6.5 4.3 4.6 6.3 7.1 +852 2203 6141 [email protected] Source: Company data, Deutsche Securities estimates

Page 20 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau Appendix 1

Important Disclosures *Other information available upon request

Disclosure checklist Company Ticker Recent price* Disclosure Wynn Macau 1128.HK 21.40 (HKD) 7 Nov 2017 1, 2, 7, 8, 14, 15 *Prices are current as of the end of the previous trading session unless otherwise indicated and are sourced from local exchanges via Reuters, Bloomberg, and other vendors. Other information is sourced from Deutsche Bank, subject companies, and other sources. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/ DisclosureDirectory.eqsr. Aside from within this report, important conflict disclosures can also be found at https://gm/db.com/equities under the "Disclosures Lookup" and "Legal" tabs. Investors are strongly encouraged to review this information before investing. Important Disclosures Required by U.S. Regulators Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes. 1. Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees. 2. Deutsche Bank and/or its affiliate(s) makes a market in equity securities issued by this company. 7. Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year. 8. Deutsche Bank and/or its affiliate(s) expects to receive, or intends to seek, compensation for investment banking services from this company in the next three months. 14. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from this company within the past year. 15. This company has been a client of Deutsche Bank Securities Inc. within the past year, during which time it received non-investment banking securities-related services. Important Disclosures Required by Non-U.S. Regulators Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes. 1. Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees. 2. Deutsche Bank and/or its affiliate(s) makes a market in equity securities issued by this company. 7. Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year. For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/DisclosureDirectory.eqsr Analyst Certification The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Karen Tang

Deutsche Bank AG/Hong Kong Page 21 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

Equity Rating Key Equity rating dispersion and banking relationships Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock. Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Newly issued research recommendations and target prices supersede previously published research.

Page 22 Deutsche Bank AG/Hong Kong 7 November 2017 Hotels / Leisure / Gaming Wynn Macau

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Page 26 Deutsche Bank AG/Hong Kong David Folkerts-Landau Group Chief Economist and Global Head of Research

Raj Hindocha Michael Spencer Steve Pollard Global Chief Operating Officer Head of APAC Research Head of Americas Research Research Global Head of Economics Global Head of Equity Research

Anthony Klarman Paul Reynolds Dave Clark Pam Finelli Global Head of Head of EMEA Head of APAC Global Head of Debt Research Equity Research Equity Research Equity Derivatives Research

Andreas Neubauer Spyros Mesomeris Head of Research - Germany Global Head of Quantitative and QIS Research

International locations

Deutsche Bank AG Deutsche Bank AG Deutsche Bank AG Deutsche Securities Inc. Deutsche Bank Place Mainzer Landstrasse 11-17 Filiale Hongkong 2-11-1 Nagatacho Level 16 60329 Frankfurt am Main International Commerce Centre, Sanno Park Tower Corner of Hunter & Phillip Streets Germany 1 Austin Road West,Kowloon, Chiyoda-ku, Tokyo 100-6171 Sydney, NSW 2000 Tel: (49) 69 910 00 Hong Kong Japan Australia Tel: (852) 2203 8888 Tel: (81) 3 5156 6770 Tel: (61) 2 8258 1234 Deutsche Bank AG London Deutsche Bank Securities Inc. 1 Great Winchester Street 60 Wall Street London EC2N 2EQ New York, NY 10005 United Kingdom United States of America Tel: (44) 20 7545 8000 Tel: (1) 212 250 2500