¨      Bottomline dragged down by lower premium win rates. GENS' 1QFY13 revenue dropped 14.9% y-o-y and 15.5% q-o-q to SGD669.6m, despite its VIP rolling chip volume surging over 38.0% y-o-y to its highest quarterly volume ever. This was due to the fact that its premium win rates had averaged at a subpar 2.12% in 1QFY13 vs our previous assumption of 2.95%. Consequently, its core EBITDA dived 34.5% y-o-y and 32.4% q-o-q to SGD249.7m. Management indicated that the headline number would have been significantly higher at SGD400m, assuming a theoretical VIP hold rate of 2.85% for the quarter. All in all, GENS posted 1QFY13 core earnings of SGD104.6m, falling short of expectations at 13.4% and 13.9% of our and consensus full year estimates respectively.  

¨      Turning cautious. Management is turning more risk-averse in expanding the company's VIP segment in view of China's slowing macros - a far cry from its bullish optimism three months ago. We see some positives in this precautionary approach to optimize default risks as Chinese tourists make up more than half of its VIP income segment. This is also evident in its receivables, which have increased up by a relatively marginal 9.6% q-o-q to SGD968.7m vis-à-vis the mid-teens growth in its VIP rolling chip over the period. 1QFY13's bad debt provisions stayed flattish at SGD45.2m compared to 4QFY12's SGD43.2m.