The mooted legalization of casinos in Thailand could cast doubt on the viability of Resorts World Sentosa’s SG$4.5 billion (US$3.3 billion) expansion project due to a decline in Chinese mass market gamblers, according to Maybank Investment Bank.
Such concerns have come to the fore in recent months with an extraordinary committee of the Thai parliament currently compiling a report into the feasibility of legal casinos. That report is due to be submitted this month.
In a Tuesday note addressing the impact of Singapore’s border re-opening on Genting Singapore’s earnings forecasts – which are now projected to increase significantly in 2022 and 2023 – analyst Samuel Yin Shao Yang warned that Thai casinos could have a significant impact on RWS, with Chinese players contributing around a third of Singapore’s mass market GGR in 2019.
While gamblers from Malaysia and Indonesia would not be drawn away in significant numbers due to “deep personal and commercial ties to Singapore”, Yin said they will likely draw away many Chinese mass gamblers.
“Even without IRs, a whopping 11 million Chinese visited Thailand in 2019 (3.6 million visited Singapore),” he said. “Should Thailand IRs materialise, we would wonder how financially viable the SG$4.5 billion RWS 2.0 expansion will be.”
In the meantime, however, Yin has raised his earnings forecast for Genting Singapore by 163% for 2022 and 123% for 2023, citing a “discernible rise in tourists in Singapore” since the recent reopening of borders and axing of pre- and post-arrival testing requirements for visitors.
This is based on VIP volumes at RWS returning to 83% of 2019 levels this year and mass volumes to 92% of 2019 levels by 2023. The revised estimates suggest Genting Singapore will record revenue of SG$1.44 billion (US$1.04 billion) in 2022 and SG$2.19 billion (US$1.58 billion) in 2023 before levelling off by 2024.
“Our FY24E earnings are barely changed (-2%),” Yin said. “We doubt Singapore and RWS’ VIP volume will recover to 100% of FY19 levels due to China outlawing cross-border gambling.
“We also doubt that Singapore and RWS’ mass market GGR will recover to 100% of FY19 levels as Macanese, Philippine and Cambodian integrated resorts negatively impacted by [China outlawing cross-border gambling] will try to draw premium mass gamblers that frequent Singapore IRs to compensate.”
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