Casino operator Genting Singapore Ltd posted a SGD163.3-million (US$119.2 million) net loss in the quarter to June 30, compared to net profit of about SGD168.4 million in the prior-year period. The company said in a Thursday filing it was “the worst quarterly performance since the opening” of the Resorts World Sentosa complex (pictured in a file photo) in January 2010.
The commentary on the non-mandatory reporting period of the second quarter showed gaming revenue was down 98.5 percent, at just under SGD6.5 million, from SGD441.1 million in the prior-year quarter.
For the second quarter of 2020, the group’s overall revenue “plunged by 94 percent, as a result of the devastating effect of the Covid-19 global pandemic,” said management in commentary. Such revenue was SGD41.3 million, compared to nearly SGD636.8 million in second-quarter 2019.
For the first half of 2020, revenue was down 64.9 percent year-on-year, to SGD448.2 million. The company reported a net loss of SGD116.7 million for the period, compared with a net profit of SGD373.9 million in the first six months of 2019.
Gaming operations at the group’s main revenue generator, Resorts World Sentosa, were suspended for almost the whole of the second quarter – from April 7 until June 30 – as a Singapore government precaution against the spread of Covid-19. Hotel operations only restarted on July 17, outside the reporting period.
Second-quarter adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) were negative SGD131.8 million, compared with positive EBITDA of SGD296.8 million in the prior-year period.
A Thursday note from banking group Nomura said that even since Resorts World Sentosa had reopened, signs of business recovery were “still distant” amid regional travel restrictions that remain in place.
“Overall management was cautious on traffic it has seen thus far in July, which might come as a bit of a disappointment to investors,” wrote analysts Tushar Mohata and Alpa Aggarwal.
Samuel Yin Shao Yang, an analyst at Maybank IB Research, said in a Friday note: “Although Resorts World Sentosa recently dismissed most of its casual staff and aims to rationalise 20 to 30 percent of its fixed costs, it does not expect to break even in the near future due to lack of international gamblers and visitors and social distancing requirements.”
No interim dividend
Genting Singapore said in its interim results filed on Thursday to the Singapore Exchange that it had decided not to declare a first-half dividend, due to “the ongoing severity and uncertainty of the impact of the Covid-19 pandemic on the group’s financial performance and on the Singapore and global economy”.
JP Morgan Securities (Asia Pacific) Ltd described the dividend decision as “disappointing but certainly understandable”.
But the memo from analysts DS Kim, Derek Choi and Jeremy An cited the firm’s management as mentioning an “intention to declare a final dividend for full year 2020, if necessary out of retained profits” if circumstances allowed it.
In its results filing, Genting Singapore’s management affirmed previous commentary that the timing of its SGD4.5-billion expansion to Resorts World Sentosa – as pledged to the Singapore government – would face some slippage.
At the time of the pledge, in April last year – coinciding with extension of the firm’s Singapore gaming rights until the year 2030 – Genting Singapore had mentioned a possible completion date of 2025 for the expansion project.
But in its Thursday filing it noted: “The timeline of the project will however be impacted due to design changes required by safety management measures and disruption to the construction industry and global supply chain caused by the pandemic.”
The company said its first-half adjusted EBITDA fell by 89.3 percent year-on-year, to just under SGD66.7 million. First-half gaming revenue was down 68.5 percent, at SGD274.4 million, from SGD871.3 million a year earlier.
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"Genting was always facing an uphill battle to displace an existing concessionaire"
Founder of consultancy Newpage Consulting