GGRAsia – GEN Singapore positive on VIP business, Nomura says

GEN Singapore positive on VIP business, Nomura says

Dec 10, 2018 Newsdesk Latest News, Singapore, Top of the deck

There is room for growth in the VIP rolling chip volume at Singapore’s Resorts World Sentosa despite a flat outlook for the mass-market segment at the Genting Singapore Ltd casino resort, analysts from Nomura have heard. The stockbroking arm of the investment bank issued a note on Friday that said the property’s management see growth in VIP rolling chip volume at Sentosa running counter to the trend at the competing casino resort in Singapore.

The note said Genting Singapore managers based their view on the idea that increasing VIP credit would drive new and current customers from Southeast Asia and Northeast Asia. “Management feels that there is still some room to increase credit to more normalised levels (from the overly tight policies of previous years),” the note said. “This has led Genting Singapore to increase its VIP rolling chip market share.”

Nomura estimates the property’s VIP rolling chip volume was 24 percent greater in the first nine months of 2018 than a year earlier, and that the Genting Singapore share of the VIP gaming market grew to 48 percent in the January to September period from 37 percent in full 2017.

The brokerage expects Genting Singapore VIP rolling chip volume to grow by 19 percent this year, 5 percent next year and by 5 percent the year after. “A trade-war-related slowdown remains on management’s risk radar,” wrote Tushar Mohata and Alpa Aggarwal, the note’s authors.

The information from Nomura’s note was taken from the Nomura Investment Forum 2018, held in Tokyo last week. Nomura is keeping its “buy” rating for Genting Singapore stock, and maintaining its price target of SGD1.39 (US$1.02).

Nomura said the amount of business Genting Singapore does in the mass market for gaming is unlikely to change significantly. “The grind segment is facing competition from the regional mass markets like Cambodia and Philippines, which can offer cheaper rooms than Singapore and also more complementary services,” the note said.

Nomura estimates that the Genting Singapore mass-market drop was 10 percent greater in the first nine months of 2018 than a year earlier, and that the Genting Singapore share of the mass market shrank to 35 percent from 41 percent last year.

Meanwhile, the note said discussions about refurbishing Resorts World Sentosa (pictured in a file photo) were “progressing well”, and that management expected to announce details in the first half of next year.