Sep 09, 2015 Newsdesk Latest News, Singapore, Top of the deck  
Union Gaming Securities Asia Ltd says the third quarter results of Genting Singapore Plc – the operator of casino property Resorts World Sentosa (pictured) in Singapore – are likely to be negatively impacted by “continued currency headwinds for two core customer geographies, Indonesia and Malaysia”.
“Over the first two months of the third quarter of 2015, the Malaysian ringgit and Indonesian rupiah have depreciated by more than 10 percent and 4 percent, respectively, on a year-on-year basis relative to the Singapore dollar,” noted analyst Grant Govertsen.
He added: “These currency headwinds will negatively impact both VIP and mass market trends in the quarter, which will only be partially offset by a nearly 10 percent appreciation in the value of the Chinese renminbi relative to the Singapore dollar over the same time period, although the Chinese renminbi strength will largely be applicable to only the VIP segment.”
Better to reflect those trends, Union Gaming lowered its estimates for Genting Singapore. The firm cut by 3 percent its previous forecasts for the casino operator’s EBITDA (earnings before interest, taxation, depreciation and amortisation) for the third and fourth quarters of 2015, to respectively SGD272 million (US$192 million) and SGD266 million.
Union Gaming now expects Genting Singapore’s EBITDA for full 2016 to be SGD1,211 million, a 2-percent downward revision from the firm’s previous forecast.
“We believe Resorts World Sentosa has been focusing increased efforts on attracting more mass-market Malaysian customers (premium and non-premium), which included the recent opening of a new hotel in Jurong Town on the main road between the border with Malaysia and Resorts World Sentosa,” noted Mr Govertsen.
“However, given the sharp recent decline in value of the Malaysian ringgit, we believe this will have a negative near-term impact on Malaysian visitation and resulting gross gaming revenue (and non-gaming revenue) at Resorts World Sentosa,” he added.
Fitch Ratings Singapore Pte Ltd earlier this month stated that the outlook for the casino gaming industry in Singapore continued to be “stable”. The ratings house cited “robust” EBITDA margins “in excess of 30 percent” at the two Singapore resorts – Resorts World Sentosa and rival Marina Bay Sands, developed by Las Vegas Sands Corp.
Genting Singapore swung into the red in the second quarter of 2015, with losses of SGD16.9 million, from a profit of SGD102.3 million in the prior-year period. Revenue fell 23 percent year-on-year to SGD578.1 million.
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”This year, so far, we will be starting [revamp] work at Grand Hyatt; then, we are looking at Countdown, and afterwards we will look at Altira and others”
Lawrence Ho
Chairman and chief executive of Melco Resorts