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Comment by Professional Ground

Indeed we have No Comment at all.
The penalists had detailed key factors on why Genting Singapore (RWS) casino would doom in our previous articles and commentaries.

VIP revenue dropped by 21% yoy. With lack of non~negotiable chips turnover, the situation would only get worse in the coming quarters. Mass gaming floor is already “dried Up” due to low domestic gaming demand.
3rd quarter EBITDA was S$254m, dropped by 27% yoy.

Essentially the bad situation surrounding Genting Singapore will not go away till mid 2015. Another round of analysis and projection will be conducted by then. From sources, China’s reform and smashing up corruption will continue at least through the year 2017. So, don’t expect any relaxing on the “flow of funds” from mainland China to Singapore casinos…
Hence, one can forget about growth in VIP volume for quite a long while.

And, for Southeast Asian VIP markets the casinos need to dig into huge CCF facility and huge credit risk exposure, which is not a sustainable operation.

Only recommendation (for Genting Singapore stock):  SELL
*target price ~ 80 cents


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Commentary by:  Professional Ground

As reported by Singapore local media, Genting Singapore stocks are performing from bad to worse.

It is expected that its stocks may fall below S$1.00

Professional Ground asssses that such scenarios are probable because of,

~ Genting Sentosa casino still yet to improve on its mass gaming floor efficiency, its Hold % is stagnated.

~ tremendous reduction of China VIP rolling chips business. High rolling of vip table waging is not sustainable.

~ high debt ratio for chip credit facility CCF and non performing collection.

~ Japan? Not a chance even the country goes for deregulation of casino sector for foreign operators. It will be the playing field for American casino operators such as Wynn and LV Sands.

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AS a whole, we don’t think that Genting Singapore is on the recovery path at all. The worse is yet to come, for them.


Commentary by:  Professional Ground

Our assessment of Genting Singapore RWS casino revenue / profitability is even more pessimistic than the general evaluation of investment analysts.

Reasons are simple, as follows:

~ the credit crunch in China will NOT be lifted in near future as in 2015 or 2016. This is based on the key policy by the Chinese premier Li, in that he needs to revert the over heated Chinese domestic market due to over leveraging on bank credits. The control measures will stay for at least next two years.

~ it is a very different scenario from Macau enclave, RWS Genting has very limited capacity to bring into their casino, what we called ‘sustainable high volume’ non~negotiable chips play! Therefore, their over~crediting and associated credit risk exposure will continue to loom.

~ RWS Genting apparently is still very weak in the two critical revenue churning practices:
    a.  Lack of floor efficiency to generate high enough HOLD % on its mass gaming floor!
    b.  Lack of powerful Junket partners to SUSTAIN high enough rolling chips turnover in order to increase its VIP programs WIN %!

So, for the next two years at least, there’s a long shallow casts overhead on Sentosa RWS casino….
Forget all ths BS about ‘Chinese high~rollers wild card’. Simply put, RWS is dealt with a Bad Hand!

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It looks like the writing is on the wall, loud and clear.

Reasons:

~ Cacinos built in business cities have not done well so far; Macau and Vegas are Fun Cities.

~ Casinos in Asia without strong and widespread Junket opetators network cannot do very well.

~ Casinos in a small populated area lack of strong domestic demands cannot do well.

Genting Singapore casino has all the above characteristics!


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Comments by Professional Ground panel of experts

Why Genting Spore Can’t Pull It Off?

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Besides the above news report extracts, here’s our panelists view:
~ no more extra money coming from the Chinese officials through Junket network for IR casinos.
Chinese gov. has tightened up the flow of the underground banking channel through southern China region.

~ the mid~range so called Premium Market has been sucking up the casino credit (look at the casino credit debt). Yet casino is not able to improve its Hold % over this pool of premium wagering. Debt collection is also not effective.

~ the mass market share has hit its ceiling long time ago… this Southeast Asian mass market isn’t that big after all. Only 1/10 of Macau enclave.

What else is left to say?


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This is eventually coming, for Singapore…


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The answer: Yes and No.

Yes ~ physical casinos will give way to On~line gaming over the next decade if on~line infrastructure continues to grow. There’s no restrictions on entrance fees and or Exclusions.

No ~ if casinos are given more flexibility to grow Junket market as well as domestic mass market…


Media report (ST) extracts

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Commented by Professional Ground gaming experts.

There’s no hope for Genting Singapore casino to improve its performance in the 2H 2014.

Main reasons due to,
~ there’s a very small VIP market in SE Asia. Mainly the pool of players demand for extended credits on chips.
~ Main junket pools from China and Hong Kong won’t spread their key resources and high value players to Singapore.
~ The IMAs (International Marketing Agents) in Singapore are quite useless, sad to say. They are unable to build, develop and sustain pools of player syndicates.
~ Singapore gaming jurisdiction does not favour Macau style casino VIP business.

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All factors considered, Singapore gaming jurisdiction will find it real hard to grow its revenue pie.


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By:  Professional Ground experts panel

The answer is YES. On the following conditions:

1. That Macau casinos are able to drive a drastic change in their business model from the current one.

2. The casinos must be willing to drastically increase in their costs of customer acquisitions. (There’s no free lunch).

3. They must go beyond the pool of mainland Chinese casino patrons.

4. Drastically improve premium patrons database management and reward system that ticks.

5. Establish what is really “premium mass” casino patrons in which casinos can create a sustainable business… and to grow it big. Casinos need to create HUGE motivational factor that can establish for themselves Big Enough Repeat Customers Pool from this segment.

Up till now, there isn’t a truly successful business model that can grow so called this Premium Mass market segment. Casinos still making big money from the junket segment and the low costs mass market.
Something in between can be a tough nut to crack…

All casinos knew about this.


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By:  Professional Ground panel

The overall results of Sands China and Marina Bay Sands are considered to be in steady growth path.

While Macau may slows down somewhat in the first two quarters, its long term growth in gaming revenue will continue in good pace between 18 ~ 23% on a yearly bssis.

Marina Bay Sands remains on the right path of developing the mid~premium markets in the region. While its very high~end market will remain volatile from quarter to quarter.

This may be the right time to bet on Sands China’s shares, as for the 2nd half of 2014 Macau gaming landscape will perform much better. This predicted trend may push the shares to new heights and continues its winds to 2015.