Towards Financial Freedom
Genting Singapore - Implications of MBS' 3QFY12 results BUY
- Las Vegas Sands Corporation (LVS) announced its 3QFY12 results yesterday. The group's results were below consensus estimates due to weaker-than-expected performance from Marina Bay Sands (MBS).
- MBS was affected by an exceedingly low win percentage of 1.79% in the VIP segment in 3QFY12. In comparison, the win percentage recorded in 2QFY12 was 2.42%. The group's trailing 12-month win percentage in the VIP segment is about 2.79%.
- Apart from this, MBS also recorded an increase in the provisions for accounts receivable of US$15mil (S$18.7mil) in 3QFY12.
- The good news is that there has been a slight recovery in the volume of business in the VIP segment. Rolling chip volume inched up 2.5% from US$11.5bil in 2QFY12 to US$11.8bil in 3QFY12. Recall that the volume of VIP business fell 10.1% QoQ in 2QFY12 as uncertainties prevailed in the global economy and MBS was more cautious in granting credit.
- However, volume of business in the mass market and slots segments declined QoQ in 3QFY12. Non-rolling chip drop declined 6.2% QoQ in 3QFY12 while volume of slots business eased 4.4%.
- Hotel occupancy rate remained high at 99.8% in 3QFY12. Average room rate was US$361/day.
- Looking at MBS' results, we believe that Genting Singapore (GenS) may record a QoQ marginal improvement in the volume of VIP business in 3QFY12 as well. GenS' provisions for receivables may be lower in 3QFY12 as the group had already recorded substantial provisions of S$67.8mil in 1HFY12.
- However, GenS may be affected by pre-operating expenses for the opening of the Western Zone in 3QFY12. When completed, the Western Zone would support GenS' profit growth in FY13F.
- We maintain a BUY on GenS as the opening of the Western Zone would increase the number of attractions and hotel rooms. This would increase casino patronage and volume of business.
Source: AmeSecurities
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