Brokerage Sanford C. Bernstein Ltd is revising upward by 18 percent its full-year 2017 market-wide estimates for Singapore casino VIP gross gaming revenue (GGR).
In a note on Friday, the institution said it now thinks combined 2017 VIP revenue for Marina Bay Sands, the gaming resort controlled by Las Vegas Sands Corp, and Resorts World Sentosa, controlled by Genting Singapore Plc, will be nearly SGD2.35 billion (US$1.73 billion), compared to its previous estimate of just under SGD2.00 billion.
But it expects most of the improvement to come via Marina Bay Sands. Sanford Bernstein thinks Genting Singapore’s 2017 VIP GGR will actually be 2 percent below the brokerage’s previous estimate, at SGD762 million. It had been anticipating SGD779 million.
“Genting’s market share relative to Marina Bay Sands will be difficult to improve materially,” wrote analysts Vitaly Umansky, Zhen Gong and Cathy Huang.
“The Singapore market generally has a more volatile win rate than the Macau market, due to fewer VIP players and larger average bet size,” they stated.
“Marina Bay Sands has a better location in the centre of Singapore, greater MICE exposure and in our view, a superior management team,” added the Sanford Bernstein team, referring to meetings, incentives, conferences and exhibitions (MICE) business.
“We expect the approximately 38 percent (Genting), approximately 62 percent (Sands) GGR market share split to retain [remain] if not to shift in favour of Marina Bay Sands (especially in the mass market),” added the institution, referring to VIP and mass combined.
Across the Singapore duopoly, it expects 2017 mass-market table revenue to be 1 percent down on its previous estimate, at just under SGD2.39 billion, while it anticipates no meaningful change to its market-wide slot revenue forecast, at SGD1.41 billion.
But the brokerage thinks Genting Singapore will outperform in mass table revenue and slot revenue in terms of Sanford Bernstein’s previous estimates. The institution raised its mass table revenue estimate for the firm by 3 percent, to SGD914 million, and for slot revenue by 1 percent, to SGD579 million.
Previewing Genting Singapore’s third-quarter operating results, expected next week, Sanford Bernstein said in its memo: “We estimate that Genting Singapore mass should grow better than Marina Bay Sands in the quarter (+6 percent year-on-year, +1 percent quarter on quarter).”
But the brokerage added: “Mass remains lethargic and VIP growth will be hampered by Genting’s new VIP commission structure announced earlier this year and likely reluctance to expand VIP credit issuance.”
The institution stated: “Resorts World Sentosa remains a number two in Singapore’s duopoly. As for the Japan opportunity, [Genting Singapore] investors still need to wait for more certainty before imputing any value”.
“Along with significant uncertainty about a potential Japan market structure and economics, Genting faces strong competition from other operators in seeking a Japan licence,” it added.
Genting Singapore had announced in late October that it had completed the issuance of publicly-offered Japanese yen-denominated bonds.
The firm was seeking to raise a total principal amount of JPY20 billion (US$177 million) via the new bonds, “for working capital and general corporate purposes in Japan”.
Genting Singapore – a unit of conglomerate Genting Bhd, founded by Malaysia’s entrepreneurial dynasty the Lim family – has previously expressed interest in investing in a casino resort in Japan once all related legislation is in place there.
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