Singapore Casino Battlefield – Who Has 60%, Wins

Posted: August 13, 2010 in Uncategorized

13 Aug 2010

SPOT-ON ! 
THE IRs REVENUES ARE COMING CLOSE TO MATCHING THE OVERALL SIZE OF THIS MARKET… AT APPROXIMATELY USD3b – 3.5b TOTAL CASINO REVENUE. WHAT MATTERS GOING FORWARD IS THEIR EBITDA MARGINS AND WHO COMMANDS 60% OF MARKET SHARE.
THAT WILL GIVE RWS AN ESTIMATE OF EBITDA OF USD1.48b IN 12 MONTHS. 

FIRST ROUND SCORE: RWS – 1 MBS – 0

Brief analysis by Professional Ground panelists:

*  It is no doubt that Genting RWS has stolen the thunder from Marina Bay Sands (MBS) with its Q2 result that exceeded analysts expectation.  That also indicates that RWS has indeed secured the 60% market share of the potentially total gaming revenue of USD3b – 3.5b market size.

*  If RWS could sustain its Q2 performance, it will achieve an Ebitda of USD1.48b in 12 months period.  That will further squeeze MBS into the corner of this fight. 

*  The good Ebitda margin of 58% shows that, RWS’s casino has gained the necessary floor efficiency of the Mass gaming operation.   On the contrary, MBS might be struggling with its systems for Mass gaming coupled with poor network of premium market players in this part of the world. 

*  Interesting question would be, what MBS is going to do in order to break out from the strong hold of Mass gaming by RWS?  And at the same time, to develop its own network of strong Southeast Asian junket network?  Can MBS expand its reach into traditional markets like Thailand, Malaysia, Vietnam and Indonesia for premium and junket-assited player pool?

*  It is evident that MBS has overlooked one core factor of its otherwise efficient operations – local/close regional network of business!  They rather, had spent time to rush for the opening of the property to meet a certain deadline, in the end it fails the first-round of the race to gain a much needed head start.  MBS needs to push real hard from now for the next 12 months in order to regain a big chunk of lost ground… otherwise, to allow Genting RWS to continue with 60% hold on the casino market share in the next three years will be “situation critical” for Sands.  As we repeat many times, the market size does not allow a 50-50 equal share.  The winner is the one who gets to command a 60% (or more) market share. 

* We envisaged that Ebitda margins (for the IRs) may gradually lower to 35 – 40% range in view of heightened competition between the two, and with greater risk appetite for developing the junket-players  business.   Direct premium market remains relatively small. 

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Comments
  1. This is the perfect post and may be one that can be followed up to see how things go

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