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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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
