Inside Asian Gaming

INSIDE ASIAN GAMING | February 2012 6 Macau, where baccarat is pre-eminent, in Malaysia and Singapore, roulette reigns supreme, and the MBS main floor had initially devoted too much precious floor space to the former game and too little to the latter. Since the casino areas at the IRs are limited to a maximum 5% of the properties’ total floor space, determining the optimal mix of games on the floor is particularly important. In the second quarter of last year, gaming revenues at RWS plunged 27.4% quarter-on-quarter, while those at MBS continued their steady increase. MBS maintained the gaming revenue lead into the third quarter and by all accounts the fourth quarter as well, although the official comparison will need to wait until 22nd February, when Genting Singapore’s Q4 results are due for release. Genting Singapore attributed the large dip in Q2 2011 revenue to lower win percentages in its premium players segment. Although gaming revenue at RWS bounced back inQ3 2011 as win percentages normalised, Genting Singapore’s earnings in the quarter were held back by a large increase in bad debt provisions related to its VIP gaming business. In what Genting Singapore called a prudent move in the face of a slowing global economy and tightening credit conditions in China, the company raised its bad debt provisions to S$56.9 million for the third quarter of 2011, up fromS$23.5million in the same quarter of 2010. Genting Singapore’s higher bad debt provisions figure equates to 8.5% of its gaming revenue, according to Citigroup, and compares to provisions equivalent to an average of 3% of gaming revenueover thepast sixquarters.Macquarie Equities Research analysts Gary Pinge, Elaine Lai and Somesh Kumar Agarwal noted that the increase in provisions for RWS is “is in contrast to Marina Bay Sands, which has not shown higher provisioning, so we wonder if Genting Singapore’s decision was driven by its aggressive credit extension that was seen in the first half of the year.” The Macquarie analysts added that Genting Singapore’s loss of VIP market share was “driven by a lack of competitive product relative to MBS,” and predicted the scheduled opening of the Bayfront MRT station near the swankier downtown MBS would also shift more mass-market players away from RWS. The analysts further pointed out that in addition to Genting Singapore’s loss of gaming market share in the third quarter, it also did not see much improvement in its non-gaming business. Looking on the bright side Not all analysts have a downbeat view on RWS, however. DBS Vickers Research predicts “RWS should start catching up soon on the back of: a) Ramp up in slot operations (+33% to 2470 machines by end-2011, comparable with MBS); b) Higher visitor arrivals with world’s first Transformers ride (launched on 3rd December) and potential spin-off from Genting Plantation’s Johor PremiumOutlets; and c) Opening of Western Zone (Maritime Museum launched on 15th Oct; 200-room Equarius Hotel and 20 beach villas by early-2012 to attract higher-end VIPs; Marine Life Park & Equarius Water Park by mid-2012).” DBS Vickers Research adds: “While MBS is closer to the CBD [central business district] and stands to benefit from completion of the Circle Line and International Cruise Terminal in 1H12, RWS can leverage on its theme parks and Genting Group’s 40-years’ experience in ASEAN (extensive customer database, good relationships with junkets).” Meanwhile, leading regional financial group CIMB (which operates in the ASEAN countries), believes RWS has yet to reach its full potential, with the completion of further rooms and attractions likely to provide Gaming revenues at Singapore’s integrated resorts Q1 2011 Q2 2011 Q3 2011 Resorts World Sentosa (S$ millions) 804.4 583.9 660.3 Marina Bay Sands (US$ millions) 464.4 594. 6 651.9 NB:The S$ to US$ exchange rate ranged between 1.2 and 1.3 throughout 2011 The full picture—rendering of the complete Resorts World Sentosa Cover Story