Towards Financial Freedom
Genting Singapore - Implications of MBS' 2QFY13 results HOLD
- We are upgrading Genting Singapore PLC (GenS) to HOLD from SELL as its share price has fallen below our DCFbased fair value of S$1.50/share.
- Going forward, newsflow for GenS would come in the form of the liberalisation of the casino industry in Japan.
- According to GenS' conference call in May 2013, the casino promotional bill in Japan is expected to be passed in October or November 2013.
- Las Vegas Sands Corporation (LVS) reported its 2QFY13 results yesterday. The group's results missed estimates due to lower contribution from Macau and Singapore.
- LVS' subsidiary, Marina Bay Sands (MBS), reported a 7.0% QoQ slide in turnover in 2QFY13 underpinned by a 7.8% fall in casino revenue.
- Volume of VIP business at MBS shrank 21% QoQ to US$14.4bil in 2QFY13. This is the first sequential decline since 2QFY12.
- We attribute the weakness in VIP business to slower economic growth in China. MBS might have also implemented more stringent credit policies.
- Bloomberg quoted Macau's Monetary Authority as saying that betting receipts in Macau are expected to show a visible slowdown in 2H2013 as high-stake gamblers contribute a smaller share of revenue.
- MBS recorded provisions for doubtful debts of US$37mil in 2QFY13 versus US$39mil in 1QFY13. The group also wrote-off debts of US$13mil in 2QFY13 against US$11mil in 1QFY13.
- Win percentage of the VIP segment inched up from 2.51% in 1QFY13 to 2.53% in 2QFY13. MBS recorded an EBITDA margin of 48% in 2QFY13 compared with 49.9% in 1QFY13.
- Volume of mass market segment at MBS eased by 2.6% QoQ to US$1.2bil in 2QFY13 while slots volume was relatively flat.
- Average hotel occupancy rate at MBS remained high at 99.4% in 2QFY13. Average room rate was US$379/day.
- MBS' 2QFY13 results are a weak follow-through for GenS. There is a possibility that the latter might have also experienced weak volume of business in 2QFY13.
- GenS will be releasing its 2QFY13 results on 6 August 2013.
Source: AmeSecurities
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