GGRAsia – Casino firm GEN Sing back to profit 3Q, positive EBITDA

Casino firm GEN Sing back to profit 3Q, positive EBITDA

Nov 16, 2020 Newsdesk Japan, Latest News, Singapore, Top of the deck

The operator of Singapore casino complex Resorts World Sentosa returned sequentially in the third quarter to net profit and to positive adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA).

Genting Singapore Ltd gave the news in a Saturday filing to the Singapore Exchange via some highlights of third-quarter performance, a non-statutory declaration under local bourse rules.

Such profit was just over SGD54.4 million (US$40.4 million), compared to a net loss of SGD163.3 million in the second quarter. Third-quarter net profit was nonetheless down 65.7 percent year-on-year, from the almost SGD158.9 million achieved in the same quarter of 2019.

The latest quarter’s adjusted EBITDA was positive by SGD149.0 million, compared to an adjusted-EBITDA loss of SGD84.9 million in the second quarter this year. Third-quarter adjusted EBITDA was down 46.4 percent on the SGD278.0 million achieved in the third quarter 2019.

Gaming revenue for the third quarter this year leapt by more than 3,000 percent, compared to the second quarter, which was heavily hurt by temporary closure measures for the resort, due to Covid-19.

Third quarter gaming revenue was SGD212.9 million, versus only SGD6.5 million in the three months to June 30. Judged year-on-year, gaming revenue was down 41.0 percent, from the nearly SGD360.8 million achieved a year earlier.

Non-gaming revenue in the three months to September 30 was SGD59.9 million, up 267.8 percent sequentially, compared to SGD16.3 million in the second quarter. The latest quarter’s tally was nonetheless down 74.5 percent from the SGD234.6 million in the third quarter 2019.

The firm noted in commentary, referring to two non-gaming attractions at the complex: “As Singapore entered phase two of the gradual reopening, Resorts World Sentosa started welcoming guests back to Universal Studios Singapore and S.E.A. Aquarium from 1 July 2020 with all necessary safe management measures in place.”

The company added: “Whilst grappling with the ongoing Covid-19 pandemic, the group continues to experience weak demand.”

Genting Singapore’s second-quarter business performance had been the weakest since Resorts World Sentosa opened in 2010. The property had been shut for most of the second quarter this year.

EBITDA outlook, Japan investment

Sanford C. Bernstein Ltd’s analysts Vitaly Umansky, Tianjiao Yu, Kelsey Zhu and Xiaonan Zhang wrote in a Sunday memo: “The company gave no further breakdown of VIP/mass/slots gross gaming revenues at this time,” adding “Genting Singapore had ceased reporting detailed financial results and hosting earnings call quarterly beginning from 2020 quarter one”.

A note the same day from JP Morgan Securities (Asia Pacific) Ltd said: “We are under no illusion that Genting Singapore’s business can go back to pre-Covid[-19] levels any time soon, as it would require full normalisation of international visitations and gambler confidence.”

But analysts DS Kim, Derek Choi and Jeremy An added: “Singapore’s travel bubbles with other Asian cities have opened the door to this, which, coupled with recent vaccine breakthroughs, allow us to envisage a world with international travel (say, in the next two to three years).”

The brokerage also gave some commentary on what it said were “less enthusiastic” remarks by Genting Singapore about investment in Japan “than before”.

The casino operator had said in its Saturday business update: “We will evaluate the conditions of the request-for-proposal (RFP) and the investment environment when the formal bidding process begins and will respond with a proposal if these conditions meet the group’s investment criteria.”

JP Morgan stated: “This sounds to us less enthusiastic on this opportunity than before (which is a good thing, in our view), understandably so.”

Samuel Yin Shao Yang, an analyst at Maybank Investment Bank Bhd, said in a Sunday note on Genting Singapore’s third quarter: “We gather that the outperformance was due to local gamblers remaining in Singapore to gamble,” amid the widespread travel restrictions around the region.

Mr Yin added: “Curiously, Resorts World Sentosa generated more [quarterly] EBITDA” than duopoly market rival Marina Bay Sands, run by a unit of United States-based Las Vegas Sands Corp… for the first time in “nearly 10 years”.

(Updated 4.10pm, Nov 16)