Below  expectations.  The  2QFY12  core  EBITDA  stood  at  SGD310.9m  (-17.4%  q-o-q and  -10.0%  y-o-y)  while  the  annualized  core  1HFY12  earnings  of  SGD786.6m  were 19.1%  and  19.3%  below  consensus  and  our  full-year  estimates  respectively.  The 1HFY12  numbers  represented  40.3%  of  our  full-year  estimates  even  though  1H was  a seasonally stronger period owing to the CNY festive season. The weaker-than-expected results  were  largely  due  to  higher-than-estimated  pre-operating  expenses  for  the Western  Zone  and  a  13%  y-o-y  drop  in  VIP  rolling  chips  volume  as  a  result  of  the continued tightening of credit provision to its VIP customers in light of the group's cautious  view  on  the  global  economic  environment.  Consequently,  casino  receivables declined by a similar 9% q-o-q in 2Q12 while EBITDA margins shrank sequentially from 47.8% to 44.3%, weighed down by: i) a lower sequential VIP win rate of 3.1% (vs 1Q12: 3.4%),  ii)  11%  q-o-q  drop  in  VIP  gaming  volumes,  and  iii)  further  increase  in  pre-operating  expenses  from  the  Western  Zone,  which  is  only  expected  to  commence operation in 4Q12. The anticipated jump in pre-operating cost over the next two quarters before  the  full  opening  of  the  Western  Zone  in  4Q12  is  likely  to  pressure  EBITDA margins over the two quarters, assuming a normalized VIP win rate, which management indicated will range from 45% to 46% before normalizing to 48% by 1Q13. 

Market  share  in  equilibrium.  Both  Marina  Bay  Sands  (MBS)  and  Resorts  World  at Sentosa  (RWS) saw  similar  11%  q-o-q sequential declines in  VIP  rolling chips  volume, but  RWS  managed  to  maintain  1Q12's  49%  VIP  rolling  chips  volume  in  2Q12.  The contribution  of  the  two junket operators or international market agents' (IMAs) to the group's VIP volume continues to be negligible at best and is unlikely to increase in the foreseeable  future  given  their  relatively  small  balance  sheet  financing  capacity. Management  has  indicated  that  it  is  likely  to  continue  to  adopt  a  cautious  VIP  credit policy over the next two to three quarters, which may be an indication of more immediate to medium-term earnings disappointments.