GGRAsia – Genting Singapore 2Q profit down despite revenue growth

Genting Singapore 2Q profit down despite revenue growth

Aug 02, 2019 Newsdesk Latest News, Singapore, Top of the deck

Genting Singapore Ltd reported net profit of SGD168.4 million (US$122.3 million) for the second quarter of 2019, a figure 5.2 percent down on the comparable period a year earlier. That was despite a 13.6-percent increase in revenue in year-on-year terms, to nearly SGD636.8 million, said the firm in a Friday filing.

The company is the operator of Singapore casino complex Resorts World Sentosa (pictured).

Property adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) rose by 10.7 percent year-on-year to approximately SGD294.4 million.

Genting Singapore reported gaming revenue of SGD441.1 million for the three months to June 30, up 21.7 percent from a year earlier. The firm does not disclose in its results filings detailed quarterly segment data on VIP and mass market casino operations.

The company reported an impairment loss on trade receivables – including credit extended to VIP players but not paid back – of SGD47.3 million for the reporting period, compared to SGD479,000 for the second quarter of 2018.

“The group’s revenue and adjusted EBITDA … were largely driven by favourable rolling win percentage in VIP gaming business,” Genting Singapore said in the filing to the Singapore Exchange on Friday.

The company stated that the decline in second-quarter net profit would have been greater “if not for the high rolling win percentage in the VIP rolling business segment” at Resorts World Sentosa. “On a hold-normalised basis, the group would have generated an adjusted EBITDA of approximately SGD230 million, a decline of 20 percent,” it added.

Gaming woes

Genting Singapore said additionally that its underlying mass gaming business “experienced significant declines in the quarter and would have been further impacted if not for considerable increased spending to tap the regional markets”. The company added that such decline was due to the “effects of a slowing local economy and [slowdown] within the region”, and that it expected such conditions to “continue to affect” its business “through the rest of this year”.

“We maintain our cautious stance on the premium segment as the regional economic environment faces uncertainty and will impact consumer confidence,” it added.

The firm announced on Friday an interim dividend of SGD0.015 per ordinary share, to be paid on September 20.

Genting Singapore said it had drawn plans to “retire certain assets” at its casino resort, in connection with the expansion planned for the property.

The Singaporean government said on April 3 that it had agreed to the expansion of the city-state’s two integrated casino resorts. In return for their investment – an aggregate of SGD9 billion – the respective operators would continue to hold a duopoly on casino gambling in Singapore through 2030, it added at the time.

As part of the agreement, casino resort Resorts World Sentosa will have two additional hotels, adding up to 1,100 rooms to the property; its Universal Studios Singapore theme park will also be expanded with two new areas – Minion Park and Super Nintendo World. Resorts World Sentosa will revamp its S.E.A. Aquarium, taking over the adjacent Maritime Experiential Museum to create a new Singapore Oceanarium.

“We are on track to execute the development plans to progressively unveil an exciting series of marquee attractions with new and enhanced visitor experiences,” said the casino operator.

Genting Singapore is a subsidiary of Genting Bhd of Malaysia, and is known to be interested in obtaining a casino licence in Japan. The company said that it had “fully met” the application guidelines and qualifying criteria of the Osaka prefecture’s request-for-concept (RFC), having received “the confirmation notice that our RFC registration was officially approved by the local government”.