Extract of media
Now that those analysts finally saw the huge Writing on the wall….
Our advice: sell Genting Singapore shares.
Special notes: you can’t overcome the jurisdiction’s highly restrictive regulatory regime.
Assessment by Professional Ground
7 May 2013
We would place Sand China Ltd target price at HK$48 – 50 by end of 2013.
Change of leadership for China has been well concluded. Bank credit will soon be gradually unleashed in favour of economic development. Domestic spending will be pushed up this two years in China.
There will be more “loose” cash (estimated >Rmb 800b) flowing into Macau enclave that inevitably push up its gaming volume for both VIP as well as mass gaming market growth.
Media report extracts
The Truth About Poor Performance for the two Singapore casinos
Special commentary by Professional Ground expert panel 3rd May 2013 Friday
According to media report, both Marina Bay Sands and Genting Sentosa casinos in Singapore failed to perform in 1st quarter of 2013; attributed to “good luck for VIP premium players”. This is BS…
Marina Bay Sands adjusted Evita dropped by 16% to Usd396m for the quarter. Though volume of rolling chips increased by 42% to USD18b the highest in record.
Win % for VIP rolling chip program is only at 2.51% as compared to 3.58% the year before.
As for Genting Sentosa casino, Ebitda dropped by 35% to USD249m for the quarter which is lowest record ever.
Genting did not mention the VIP rolling chip win % but Professional Ground would estimate that it is far below the 2.7% mark, could ever be in the low region of 2.2%.
Both the casinos are facing the hard-wall of trying to grow their premium business but fail. The reasons being, in our evaluation, are
- they are not able to establish a much larger base of mass market revenue stream in order to sustain bigger profitable operation, to be more bold in funding the VIP business credit growth.
- they fail to bring in solid and real Junket operators like in Macau. Due to overly stringent casino regulatory control.
- they just cannot sustain high credit exposure up to a point as the mini-junkets in Singapore are not able to sustain on high volume rolling chips turnover every month (with junket credit)! This is a fact.
Going forward, both the casinos’ dilemma will continue for the next few years at least. SINGAPORE tight casino jurisdiction and players pool won’t change very much for sure. There’s no new markets available for both the mass and premium players/patrons.
Getting Singapore shares rating - SELL
By: casino expert panel
Our Assessment Is – A Very Long Shot
All these talks about Genting having lots of hard cash etc. are just blowing hot air with regard to Japan casino venture.
First and foremost, the Japanese gambling groups are cash rich as well, especially the Pachinko enterprises.
Secondly the Pachinko groups of syndication won’t allow Genting group (or for that matter Lisbao Macau) to enter their turf.
Thirdly, there is no casino market opening up until the Pachinko (industry) sharing a big pie of it. You must be nuts to think that outsiders could just walk into Japanese market and run the show on such lucrative BUSINESS on their own?!
Remember, Pachinko and Japanese politicians are all in one for long time.
Even if Japan truly legislates casinos for foreign entry, Sands and Wynn are having better chance than Malaysian casino operator… Americans come first. And, it has to be joint venture and not wholly foreign owned.
So, think before you push Genting’s share too high with unrealistic expectations. It remains just an illusion for Genting.
By: Profesional Ground expert panel
This Is The Main Reason… That Casino Debts Are High
We had mentioned in the past many occasions about why Singapore casinos (Genting and MBA) would continue to rack up gambling bad debts, yet struggling along to grow their VIP business.
The mainland Chinese high-rollers are simply too smart for the two casinos.
Thai VIP market is of the same issue, I.e. they want to play (bet) with credits and not so much on hot cash.
So, this is the obvious.
The two casinos would continue with their journey of high credit risk with VIP business under an extremely restrictive gaming jurisdiction.
Local patrons? Forget about further expansion of this pool. The local authority is closing in on “financially vulnerable” gamblers…
Another Indication is the dwelling down of casino gamblers from the neighborhood Malaysian state of Johor.
Our assessment remains that both Genting Sentosa and Marina Bay Sands casino revenue growth will be flat, at best on single digit upside trend.
Genting May Just Miss The Mark Again…
Though some analysts out there start to sing praises again for Genting Singapore shares again, we at Profesional Ground are having reservations.
The key detractor for Genting Resorts World casino at Sentosa remains:
- mainland China and northern India premium markets are beyond the reach of Genting. (there are some reasons…)
- Genting hasn’t muster the art of managing and rallying strong Junket operators serving credit & commission based casino big whales…
Singapore media extracts
Commented by Professional Ground casino expert panel
Dispute At Marina Bay Sands Casino
SIMPLE CASE. If this casino patron had signed the VIP Program application form, then he ought to be under VIP Player terms and condition. Then under such circumstances, the credit to him was part of the deal during the specific program period.
He’s liable to pay back whatever amount he owes the casino.
above: casino patron ONG refuses to pay back gambling credit owed to the casino
From the announced Genting Singapore’s operating results, the writing is on the wall.
- 4th quarter 2012 EBITDA dropped 12%.
- 2012 EBITDA dropped 19%.
- 2012 Operating Profit dropped 33%!
- poor (casino) floor mamagement.
- poor junket operator network, continue to use “mickey mouse” International Marketing Agents.
- unable to consolidate higher % of active repeat casino patrons with high LTV (Life Time Value).
For the year 2013, don’t expect the situation to improve. Regional economic (Southeast Asia) remains volatile.
It continues to be a FLAT year for Singapore IR/casinos.