Genting RWS Fails Expectations of Overly Optimistic Analysts

Posted: November 12, 2010 in Uncategorized

Contributed by:  Professional Ground editorial team

12 th Nov 2010  (FRI)

WE HAVE PREDICTED CORRECTLY THE COMING SURPRISE FOR GENTING RWS, in our previous blog article (dated Oct 25th): “Vegas Doom, Asia Boom” under the Editor’s Notes paragraph — “Performance of Genting RWS in the 3rd quarter may surprise many in view of volatility of VIP gaming, coupled with tighter control measure imposed on domestic market by the authority.”  


The coming 4th quarter results may be another (negative) surprise...

Here’s the results of Genting RWS 3rd quarter performance:

 *  Genting Singapore 3rd qtr revenue is S$744m, 24% less than its 2nd quarter 2010.

 *  Ebitda reported as S$347m, a huge drop of 31% compared with its 2nd quarter.  (Turnover & margins would have reduced much).

 *  RWS daily averaged top line revenue is S$7.95m for its 3rd quarter.  Averaged Ebitda is S$3.77m daily.

 *  MBS 3rd quarter Ebitda = S$314m as compared with RWS 3rd quarter’s S$347m.  It is a clear sign that Marina Bay Sands has caught up with Genting RWS in the race.

*  Overall assessment of both the IR operations in the 3rd quarter is that the two IRs have an equal share of 50% of the total market pie at the moment. Can they grow the pie bigger as from now on? Our professional team members would think that the size of this market would likely to grow by another 25 – 30% within the next 3 years.

MAIN REASONS for less than expected performance of Genting RWS:

–  The initial “try-out” spirit/interest by VIPs from East Asian region (China, Hong Kong, Macau, Korea, etc.) has worn out gradually.  What remain in VIP Rooms are those from Thailand, Indonesia and Vietnam VIP pools.  Hence, VIP gaming turnover could not be sustained over longer period into 3rd quarter and beyond.

–  Mass market patrons have no loyalty per se.  By now, most of the mass market players (especially locals) had tried Marina Bay Sands and prefer the ease of traffic and MBS’ environment.  Further more, they don’t like to mix with the huge crowd coming in from across the border. Therefore, MBS has better hold of local market in casino betting.

–  At this juncture, Genting RWS would have assessed that their direct credit to VIP players is creating a huge credit risk exposure.  They might not wish to continue to roll into such a “big hole” just to hold-on to the unrealistic high turnover of non-negotiable chips.

–  When dust settled down, the 3rd quarter results as reported by Genting and Marina Bay Sands would have make clear the reality of the game.  That this market size is not what some most optimistic analysts on earth would think.  So, we again put forth yet another cautionary words:  The coming 4th quarter may still give us a surprise.  Watch your bets!

–  It was reported in the press CLSA analyst Mr. Fischer was very optimistic to mention that “the local market is still underpenetrated and more Singaporeans will likely continue to add gaming as an entertainment option”. Fischer speaks as if he knew about Singapore government’s “supportive” thinking about such encouragement?  On the contrary, we can envisage that more control measures will be pulled out from the hat when too many Singaporeans take gaming as an entertainment.


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