By Ben Blaschke
Malaysian broker Maybank Kim Eng has raised its target price for Genting Singapore by 14% ahead of next week’s 1Q earnings release on the back of high VIP volume and lower VIP rebate rates.
In response to a request from Inside Asian Gaming, Maybank said it esimates 1Q17 EBITDA for Genting Singapore of SG250 million – up from SG192.5 million year-on-year and a slight increase on the SG233.7 million recorded in 4Q16.
In-particular it observes a “strong correlation between Macau VIP gross gaming revenue and Singapore VIP volume.”
“While Macau is the ubdisputed preferred destination of Chinese VIPs, we understand that Singapore comes in second,” Maybank said. “1Q17 Macau VIP GGR grew 6% quarter-on quarter thanks to higher property and commodity prices – and as 1Q17 Marina Bay Sands VIP volume already grew 9% quarter-on-quarter, we expect Resorts World Sentosa’s (RWS) VIP volume to have grown too.”
Maybank also suggested that the arrest of 18 Crown Resorts employees in China last October has reduced competition for Chinese VIPs, allowing RWS to cut its direct VIP rebate rates.
The brokerage predicts RWS will regain much of the mass market share it had previously lost to Marina Bay Sands.
“We understand that RWS has more Malaysian mass-market gamblers than MBS due to its Genting heritage,” Maybank said. “As the MYR/SGD weakened in 1Q17, we believe RWS lost mass-market GGR share then … but with the MYR/SGD recovering in 2Q17 thus far, we reckon it could regain its share in 2Q17”
