GGRAsia – GEN Singapore to show higher VIP share 4Q: Bernstein

GEN Singapore to show higher VIP share 4Q: Bernstein

Feb 19, 2019 Newsdesk Latest News, Singapore, Top of the deck

Genting Singapore Ltd has gained market share in that city’s casino duopoly in the crucial VIP gambling segment during the fourth quarter, according to brokerage Sanford C. Bernstein Ltd. Genting Singapore reports its fourth-quarter results on Thursday.

In a note issued on Tuesday, Sanford C. Bernstein said: “We expect Genting Singapore to gain share quarter-on-quarter and year-on-year in VIP…” This had been “driven by credit extension” to players, the institution added.

It estimated that Genting Singapore gross gaming revenue (GGR) in the VIP market – via its Resorts World Sentosa resort (pictured) was SGD235 million (US$173.16 million) in the fourth quarter, 4 percent below what was recorded in the third quarter, but 17 percent more than a year earlier.

The note written by analysts Vitaly Umansky, Eunice Lee and Kelsey Zhu said easier credit was in likelihood fuelling growth in the VIP segment. It also noted that the amount of money under the heading accounts receivable at Genting Singapore expanding by 27 percent in the third quarter compared to the second quarter.

“We will pay close attention to see if the trend continues in the fourth quarter,” as well as “the impact on rolling chip volume and bad debt expense,” the note said.

Casino operator Genting Singapore is a part of Malaysian conglomerate the Genting group. Its competitor in that market is Marina Bay Sands, run by United States-based Las Vegas Sands Corp.

It noted that the American group, which reported its fourth-quarter earnings in late January, had reported performance at Marina Bay Sands that was “below consensus expectations, largely due to poor VIP volumes, as the property is capacity constrained, coupled with low hold rate”.

Sanford Bernstein estimated Genting Singapore’s share of mass-market gambling business in the city-state’s duopoly was about the same in the fourth quarter as in the third, but had improved judged year-on-year.

The brokerage estimates Genting Singapore mass-market GGR was SGD240 million in the fourth quarter, 17 percent more than in the third but 1 percent fewer than a year earlier.

The note said Genting Singapore had a strong third quarter that was improved by better-than-expected revenue drawn from record-high hotel occupancy and increased tourism arrivals and spending in the city.

The brokerage said gaming revenue in the mass-market segment was softer but the VIP segment and slot machines were as forecast. The casino resort’s management said competition, especially from Singapore’s regional neighbour Cambodia, had reduced mass-market income.

For the fourth quarter, the brokerage said the company’s GGR from slot machines was SGD166 million, 1 percent more than in the third but 4 percent fewer than a year earlier.

The note forecast that Genting Singapore would report fourth-quarter adjusted earnings before interest, tax, depreciation and amortisation of SGD311 million, 3 percent down on the third quarter but 22 percent more than a year earlier, on revenue of SGD650 million, 2 percent more than in the third quarter and 12 percent more than a year earlier.