Has Singapore exhausted its lucrative locals market?
That’s what investment analysts are pondering as they reflect on the prospects of its two integrated resorts heading into 2013.
Singapore was expected to pass Las Vegas as the world’s second-largest casino market in terms of gaming revenue last year. That didn’t happen. The US$5.85 billion recorded by Genting’s Resorts World Sentosa and Las Vegas Sands’ Marina Bay Sands, while representing an 8% increase over 2011, fell short of the $6 billion-plus that was expected.
MBS posted $2.94 billion in revenue in 2012. RWS, which released its results on Friday, made $2.91 billion.
“The local Singaporean market essentially maxed out,” says Grant Govertsen of investment firm Union Gaming Research Macau.
Singapore’s high-end “seems to be recovering” while mass-market gamblers “continue to be muted,” he notes.
“With that in mind, we would expect Singapore gross gaming revenue to grow in the low or mid-single digit range in 2013. As such, we would expect Las Vegas Strip gross gaming revenue in 2013 to remain ahead of Singapore.”
Both resorts continue to be affected by tougher regulatory restrictions on locals play, which is resulting in softer growth in mass-market tables and slots. Genting has been focused on mass, keying on Malaysia and Indonesia. However, there may not be many new customers to be found, Mr Govertsen suggests, and it was actually an increase in VIP play that drove a 7% gain in revenue for Genting Singapore in the fourth quarter.
Revenue hit S$792 million in the October-to-December period (HK$6.26 billion/US$639.1 million), the company reported, up from $786 million in Q4 2011, largely on an estimated 50% spike in rolling chip turnover. UGR is forecasting 10% growth in VIP volume at Sentosa in 2013.
Genting said in the filing with the Singapore Stock Exchange that it is cautiously optimistic for the year but warned of margin pressure in the first half. Fourth-quarter EBITDA was down 6% to S$369 million, and a number of one-time write-offs at Sentosa saw profit down 38% to $162.2 million.
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