GGRAsia – RWS 3Q VIP business solid without overpaying: analysts

RWS 3Q VIP business solid without overpaying: analysts

Nov 14, 2023 Newsdesk Latest News, Singapore, Top of the deck

The third-quarter VIP gambling business for Genting Singapore Ltd, operator of Resorts World Sentosa (RWS), half of Singapore’s casino duopoly, was “surprisingly solid”, with its rolling chip volumes “jumping” 62 percent quarter-on-quarter to approximately 130 percent of pre-Covid levels “to overtake Marina Bay Sands as the VIP leader”.

That is according to a Monday note from JP Morgan Securities (Asia Pacific) Ltd, commenting on the results issued on Friday by the Singapore Exchange-listed Genting Singapore.

The VIP performance of Resorts World Sentosa (pictured) in the third quarter was a “positive surprise, as we and the market hadn’t given management the benefit of [the] doubt when it discussed its new initiatives,” said JP Morgan.

The new steps had included “expanding host networks,” and “utilising private jets more aggressively” to bring in high-value players, “for the past couple of quarters,” stated the institution.

Banking group Nomura said in a note on Genting Singapore’s reporting quarter: “VIP marketing efforts such as a bespoke commission programme, for the high-end VIP customer base from north Asia, helped boost gaming revenue.”

For its part, JP Morgan observed: “Our conversations with management indicated no significant change in credit policy either.”

The institution took that to mean Genting Singapore “didn’t seem to buy” – i.e., use over-aggressive marketing – for the business they got in the VIP segment.

“We think the positive VIP momentum continues into the fourth quarter to date,” added the brokerage.

JP Morgan also observed that mass-market gross gaming revenue, including slots, “remained solid and grew 10 percent-plus, quarter-on-quarter, to 113 percent of pre-Covid, gaining share: 3 percentage points quarter-on-quarter, to 33 percent”.

In other commentary, Nomura said that Resorts World Sentosa’s non-gaming operation had benefitted from “summer holiday visitors from Greater China, India, ASEAN and Australia,” referring latterly to a club of Southeast Asian nations.

In its Friday results announcement, Genting Singapore said its board had approved a total investment of about SDG6.8 billion (US$5.0 billion) to upgrade and expand Resorts World Sentosa.

The figure includes “amounts which have been spent and the remainder to be invested over the next eight years,” stated the company. That was a reference to a previous SGD4.5-billion pledge to the city-state’s authorities for the expansion of the complex, known as “RWS 2.0”.

The revised budget “shouldn’t surprise,” as Genting Singapore had been “discussing up-sized project scale/budget for a few quarters already,” noted JP Morgan.

According to Nomura, the cost increase for the expansion of Resorts World Sentosa is “attributable to higher commodity/labour costs over the past few years, along with a more premium offering.”

Such offering would be likely to include a lower number of rooms – but more premium suites – versus the higher number of rooms as presented in the original design, it added.