Marina Bay Sands Creates the Dawn of New Era

Posted: October 29, 2010 in Uncategorized

Commentary by:  Casino panelists

29th Oct 2010   FRI

The report on Marina Bay Sands 3rd quarter result and LV Sands overall quarterly performance in Asia has cheered up mood of investors. especially for marina Bay Sands, its 3rd quarter performance makes a clear statement to Genting RWS, that MBS is still alive and kicking strongly.

Analysts assumed that MBS has already clawed back 50% of the market share for Singapore IR arena; and henec it will mean that Genting RWS will not be able to sustain its 2nd quarter performance through the 3rd quarter.

What has MBS achieved in its 3rd quarter? here’s a brief report card:

*  Revenue:                                  USD486m

*  Pre-tax Profit:                        USD242m

*  Profit Margin:                         49.7%

CLSA Hong Kong claims that the overall market size for the two Integrated Resorts might be as high as USD7.6b per annuam.  We would think that this is purely a high-hope speculation. However, with US economy in the slump, it is probable that Singapore casino revenue will exceed Las Vegas within this two years while hot money still coming into Asia from North America and Europe.

Pro Ground casino panelists’ views are as follows:

–  That MBS’ 3rd quarter performance (casino) is mainly churned up by its VIP rolling chips supported by huge amount of credit to players and througth indirect junket syndicates via Hong Kong and China. The spread for VIP gaming top line is about 65 – 70% of total casino revenue.

–  Is the heavy churning of turnover via volatile VIP rolling figures (both Genting RWS and Marina Bay Sands) sustainable over the next few quarters and onwards? May be. Take note that the amount of credits that’s been built up by the two casinos are not clearly reflected.  analysts should take this factor into account.

–  At the moment, both Genting and MBS need to push real hard to convince investors and analysts that their investments in the IR remain sensible and profitable.  Therefore, the two are leveraging on the low VIP gaming tax regime to increase their bets (i.e. credit risk exposure) on VIP rolling chips (turnover). 

–  We assess that the overall casino market size for Singapore IR is likely to be in the USD5b range.  If VIP gaming continues to lead the top line.

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