GGRAsia – Genting Singapore 2Q profit up despite revenue fall

Genting Singapore 2Q profit up despite revenue fall

Aug 03, 2018 Newsdesk Latest News, Singapore, Top of the deck

Genting Singapore Ltd reported net profit of SGD177.6 million (US$129.6 million) for the second quarter of 2018, compared to SGD143.3 million in the prior-year period. The improvement in profit was despite a 6-percent decline in revenue, said the firm in a Friday filing.

The company – a subsidiary of Malaysian conglomerate Genting Bhd – is the operator of Singapore casino complex Resorts World Sentosa (pictured).

Property adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) declined by 8 percent year-on-year to nearly SGD273.9 million.

Genting Singapore reported gaming revenue of SGD406.1 million for the three months to June 30, down 8 percent from a year earlier. The firm does not disclose in its results filings detailed quarterly segment data on VIP and mass market casino operations.

“Management said that the company continued to extend more credit (prudently) to VIP players, leading to robust VIP volume growth during the quarter (volume +27 percent year-on-year, VIP gross gaming revenue +10 percent year-on-year), but hold was low at 2.6 percent,” said brokerage Sanford C. Bernstein Ltd in a note on Friday, quoting comments by Genting Singapore’s management in conference call with investment analysts following the second quarter results announcement.

“Mass revenue had been impacted by competition from Marina Bay Sands and casinos in other markets, with table drop +11 percent year-on-year (+16 quarter-on-quarter) and slots handle increase 6 percent year-on-year (-1 percent quarter-on-quarter), but what appears to be low hold negatively impacting mass tables gross gaming revenue,” Sanford Bernstein analysts Vitaly Umansky, Zhen Gong and Kelsey Zhu added.

“In the gaming segment, our VIP rolling volume showed encouraging year-on-year growth but luck factor was not in our favour,” Genting Singapore said in the filing to the Singapore Exchange on Friday. “On a hold-normalised basis, Resorts World Sentosa would have generated an adjusted EBITDA of approximately SGD293 million.”

The company added: “Resorts World Sentosa continues to be at the forefront of Singapore’s leisure and entertainment industry, attracting visitors from all around the world. Our signature attractions performed well during the second quarter of 2018 with average visitation exceeding 18,000 daily.”

Genting Singapore reported an impairment loss on trade receivables – including credit extended to VIP players but not paid back – of SGD479,000 for the quarter, compared to nearly SGD14.7 million for the second quarter of 2017.

The firm announced on Friday an interim dividend of SGD0.015 per ordinary share, to be paid on September 20.

Genting Singapore stated that Resorts World Sentosa would stage a series of “exciting gourmet and lifestyle events” in the near future.

It added: “Following the popularity of the gastronomic events last year, over the next two months, we will be bringing back the ‘RWS Street Eats’, featuring iconic street eats from Southeast Asia and ‘The Great Food Festival’, Singapore’s largest food and lifestyle event led by international celebrity chefs.”

The company also stated it was “gearing up” to bid for a casino licence in Japan, following the passage on July 20 of the long-awaited Integrated Resort (IR) Implementation Bill, a second of two pieces of legislation that will lead to the establishment of a domestic casino in hat country.

“The group has been gearing up for this expansion opportunity and has been hiring a new team of Japanese nationals in different disciplines to prepare for the bid,” said Genting Singapore.

The casino operator announced last month that it had set up an additional five new indirect wholly-owned subsidiaries in Japan, eyeing the eventual operation of integrated resorts in that country.

Several major global gaming operators have reaffirmed their respective interest in developing a casino resort in Japan. A number of industry executives expect the first casino licences to be issued in around the year 2020, with the first resorts to open for operation in circa 2025.