GGRAsia – RWS mass share concerns but strong end to 1H: analysts

RWS mass share concerns but strong end to 1H: analysts

Aug 11, 2023 Newsdesk Latest News, Singapore, Top of the deck

The first-half results of Singapore casino operator Genting Singapore Ltd were “better” than had been feared following a soft first quarter, said two brokerages.

A third noted that although the market regarding visitors to the city-state from mainland China had been “tepid” compared to pre-pandemic levels, the Resorts World Sentosa (RWS) property had benefitted from clients from immediately-neighbouring countries.

First-half net profit at Genting Singapore jumped by 227.7 percent year-on-year, to SGD276.7 million (US$205.6 million), the firm had said on Thursday.

“Despite first-half Chinese visitation to Singapore being tepid at 23 percent of first-half 2019 levels, RWS’ operations – e.g., VIP volume, non-gaming revenue – still recovered” in a “broad-based” manner, “driven not just by the return of Chinese visitors but the return of Southeast Asian visitors, namely from Malaysia and Indonesia,” stated analyst Samuel Yin Shao Yang of Maybank Research Pte Ltd, in a Friday note.

“We believe that RWS is better positioned to withstand any potential deceleration in the Chinese economy than say the [Macau] integrated resorts,” added Maybank.

Resorts World Sentosa is one half of a Singapore casino duopoly alongside Marina Bay Sands, run by United States-based Las Vegas Sands Corp.

“Genting Singapore’s second-quarter 2023 results were better than expected, helped by a higher-than-theoretical VIP win rate,” wrote Nomura analysts Tushar Mohata and Alpa Aggarwal in their Friday note.

Banking group JP Morgan said the VIP “luck” factor for the house in the second quarter, had benefitted Genting Singapore by circa SGD55 million.

The second half could see “further ramps” in overall performance due to the summer holiday season in the northern hemisphere, and improving flight services, as well as “additional room inventory thanks to the completion of the Festive Hotel renovation in June 2023,” said JP Morgan.

Maybank observed that “barring a global recession,” it expected the second half for Genting Singapore to be” even better, on seasonally more visitors,” particularly from China.

“July 2023 seat capacity from China to Singapore… recovered to 74 percent of pre-Covid levels,” noted Maybank analyst Mr Yin.

But JP Morgan flagged concerns about Resorts World Sentosa experiencing market share loss to Marina Bay Sands in the mass-market gambling portion of the business.

JP Morgan stated: “Genting Singapore’s mass-table/slot shares continued to slide to record-lows of 30 percent in the second quarter, down from about 37 percent in 2019.”

The banking group added: “The company aims to gain back share with a few initiatives, such as room renovation – completed in June, and ‘The Forum’, featuring upscale retail and food and beverage, due to open by end-2024… but it’s tough to give it the benefit of the doubt at this stage.”

However JP Morgan listed among “key positives” for the first half, the announcement by Genting Singapore of an interim dividend of SGD0.015 per common share, up from SGD0.010 last year.

“This, in our view, paves the way for full normalisation of the dividend by financial year 2024, likely back to pre-Covid levels of SGD0.40 per annum,” i.e., equal to the SGD0.15 interim dividend plus SGD0.25 final dividend paid in 2019.