Why Genting Resorts World Casino Fails to Perform?

Posted: November 14, 2012 in Uncategorized

Extracts of analysts assessment

Here’s the reasons reported coupled with below-par management standard:

What Nomura says,

 VIP rolling volumes declined 3% q-q (vs our estimate of flat volumes q-q) with a win rate of 2.8%, compared to 3.1% in 2Q12.

 Non rolling chip volumes went down 3-4% q-q, while the win rate improved by 1%, resulting in flat non rolling chip revenues sequentially.

 Total Singapore gaming industry revenue is estimated by us at SGD1.5bn for 3Q12, down 8% q-q and 22% y-y. YTD, we estimate the Singapore gaming revenue at SGD5.2bn, down 6% y-y.

 Market share stood at 51% for rolling chip volume; 47% for mass market.
 GENS reported blended EBITDA margins at 45% in 3Q12, flat q-q, which it guides to remain under pressure for the next two quarters as well, given higher pre-opening operating expenses and capacity building expenses at Marine Life Park, whose soft launch is expected in December 2012. The company expects margins to improve only from 2Q13 onwards.

 The company acknowledged that local Singaporean visitors to the casino have gone down while visitors from Malaysia and Indonesia have marginally improved in 3Q12. However, given the strict Singapore laws on gambling, the company expects the local market to suffer a bit in future and plans to focus on tourists from outside Singapore.

Professional Ground assessment:

It is envisaged that Singapore gaming market would not grow within the next 3 – 4 years, in view of unstable economic scenarios.
Further more, VIP gaming landscape for Singapore will continue to be under extremely tough regulatory control regime.
Genting Singapore stock will remain luke-warm.


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