Visitor arrivals to Resorts World Sentosa (pictured), a Singapore casino resort operated by Genting Singapore Plc, rose by almost 20 percent year-on-year in the third quarter, said investment analysts, citing guidance from company management.
But average daily spending of visitors to the property fell by as much as 10 percent in the period, added a note on Tuesday from Daiwa Securities Group Inc.
“One bright spot for Genting [Singapore] is the non-gaming segment, which saw a record quarter of visitor arrivals of about 21,000 per day in the third quarter 2015 (versus 18,000 to 19,000 [daily]) in the third quarter 2014,” wrote Daiwa’s Ramakrishna Maruvada and Shane Goh. The property is the only casino gaming resort in Asia so far to have an internationally-branded theme park – in this case Universal Studios Singapore – in its grounds.
“However, average daily spending has fallen by 6 percent to 10 percent year-on-year, likely as a result of softer regional currencies,” added the analysts, citing conversations with the firm’s management.
“Management noted that the broader mass market customer base in Singapore is nearing saturation, and so it will focus on overseas markets, such as Thailand, to grow its pool of customers,” added the Daiwa team, referring to the targeting of visitors from a neighbouring country that has not so far permitted the operation of licensed casinos.
Nonetheless, Daiwa said that in the short term Genting Singapore continues to face challenges. The brokerage noted that Genting Singapore’s share price had fallen by 29 percent year-to-date, “as the company and investors grapple with bad debt impairments and losses on available-for-sale financial instruments”. Such losses amounted to SGD274.5 million (US$194.6 million) in the third quarter, the brokerage added.
On November 12, Genting Singapore reported a 62 percent year-on-year decline in third quarter net profit to SGD37.2 million. The decrease was related to a dip in gaming revenues and an increase in bad debt write-offs, the firm stated in a filing to the Singapore Exchange.
“As it has tightened its credit extension criteria since the start of 2015, it expects provisions to decline from second half 2016,” stated Daiwa on Tuesday.
The brokerage noted that Genting Singapore booked SGD92.5-million worth of bad debt in the third quarter.
Daiwa said it had learned from management that Genting Hotel Jurong – a 557-room hotel which had a soft opening in April and provides complementary accommodation for the main resort – had an 80 percent occupancy rate in the third quarter compared to the 92 percent achieved by the resort’s on-site hotels. Genting Jurong is approximately 15.4 kilometres (9.6 miles) from Resorts World Sentosa.
Daiwa said the new hotel – fully opened in July and which Genting Singapore says boosts Resorts World Sentosa’s accommodation by one third – had a mix of business travellers during weekdays and leisure guests over the weekends. “Moving forward, the strategy is focused on increasing the flow of Genting Hotel Jurong guests to its resort,” said the analysts.
Union Gaming Securities Asia Ltd said in a note following Genting Singapore’s third quarter numbers that it estimated Resorts World Sentosa had a 36 percent share of the Singapore casino market’s VIP gambling rolling chip volume during the period, and an approximate 40 percent share of mass market gross gaming revenue.
The rest of the Singapore casino gambling sector is by implication said to be in the hands of Genting Singapore’s only market rival, the Marina Bay Sands resort, a property operated by Marina Bay Sands Pte Ltd, a unit of global casino operator Las Vegas Sands Corp.
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”Month-to-date [in October], we are encouraged that our properties have crossed property-EBITDA break-even levels, led by the recovery in the premium segments”
Chief executive and president of MGM Resorts