Disappointing Q3 results were not only softer than 2Q but also missed the S$400 whisper 




NOTE: All dollar figures are in Singapore Dollars unless otherwise stated

  • Group revenue was S$744MM and EBITDA was S$347.6MM
  • RWS revenue was S$731.8MM and EBITDA was S$346.5MM
  • Hotel occupancy was 71% and ADR was S$250
  • Universal Studio Singapore ("USS") continued to operated at a daily maximum capacity of 8,000 with an average visitor spend of S$81
  • The Group's UK operations, which are in discontinued operations, delivered revenue of S$93.8MM and EBITDA of S$8.7MM. The reduction in YoY results was mainly due to poor hold and the weakening of the Sterling vs. the Singapore dollar
  • "RWS goes into the last quarter of 2010 with four hotels fully operational and with an enhanced line-up of food and beverage and retail offerings. The resident circus-spectacular show Voyage De La Vie opened in July to good response."
  • "Battlestar Galactica and the much-anticipated Journey to Madagascar rides are expected to expand the attractions in the first half of 2011. This, together with the world debut of Transformers in the second half...The capacity is expected to increase substantially from 8,000 to 18,000."
  • "We are still in the initial year of operations as we continue to improve operational efficiency, integrate overall resort management and methodically implement marketing plans."
  • "Construction of the West Zone has commenced. We are expecting to start operations progressively from year 2011, beginning with the Maritime Xperiential Museum in the first half of 2011, followed by the world‟s largest aquarium, the Marine Life Park, the destination spa and a variety of luxurious accommodation at its Equarius Hotel and Spa Villas."



  • Describes LVS as a very aggressive competitor
  • Revenue only decreased 15% despite the entry of a new player
  • EBITDA margin decreased to 48% due to the expiration of warranties on gaming equipment and the ramp of their show.  Hold has also normalized from a very high win rate in the 2nd quarter.
  • The market is still in the infant stages. Over the next few years, they expect that the better IR - ie RWS - will have a majority of the share.
  • Had over 3MM visitors in Q3
  • In 3Q they stepped up their marketing programs overseas
  • Many of the visitors to USS were repeat guests
  • The theme park was cash generating
  • VIP win was 55% of total gaming receipts, down from 60% in 2Q
  • Operated more than 100 tables in VIP and 370 tables, 1200 slots



  • Margins should be between 45-60% going forward
  • When USS ramps up, it will be margin accretive
  • Provision of bad debt? Increased in the quarter?
    • Level was the same as in Q2 and don't expect any increase in that level
  • Rebate rates?
    • Still at similar level as 2Q
  • Market share - 53% right now, where will it be headed in VIP and Mass?
    • Over time they expect the market to skew to towards the better product and management, which they believe they have. 
    • In terms of their marketing plan, they are still in the process of rolling it out. So they still view the market as virgin territory.
    • Expect growth to be quite healthy
  • Theme park was cash positive in the quarter
  • October - it was possibly more robust than September
  • % of total revenue from non gaming: 10-20%
  • Slot revenue %: no comment
  • Regulatory risk - Singaporeans are generating a significant percentage of their revenues and perhaps the government would like to reduce that over time?
    • Doesn't think that that is a regulatory risk as long as they continue to operate under the rules
    • Local contribution will shift over time as marketing programs roll out
  • What is the table and slot limit at their facility?
    • Depends on whether they are in the main or VIP area
    • Theoretically they can increase to 560 tables with no problem
  • Market share based on RC share?
    • They are higher than 53% - "much higher" than LVS's
  • Trade receiveables increase to S$423 - all applicable to RWS but not all is casino related.  70-80% is casino related, same as last quarter. Quarter on casino receivables have increased substantially
    • Believe that they are doing a good job between balancing revenue growth and credit extension
  • Opportunity in Japan and other jurisdictions in Asia
    • They will look at Japan very seriously
    • They will look at "developed" Asia opps
  • Time frame of Japan
    • Legislators are still doing the research
    • If everything goes well, they expect a bill passage by end of 2011/early 2012
  • It will take some time for the junkets to be licensed. Looking at early next year.
  • Sense of seasonality - difficult to quantify, but they did say that August is a "ghost" month. Expect the 4th quarter to have a stronger showing because they have a lot of school holidays. Their results were in-line with their expectations.
  • Level of demand for junket oriented play that they are currently unable to serve
    • "There is very huge demand"
    • It's a very virgin market so pinning the number down is very difficult
  • S$300MM operating expenses per day excluding taxes.  As the theme park continues to ramp, the margins will get better. There will be an one-off operating expense related to the park opening in 4Q2011. There were some, but not very significant, start up costs related to show and attraction openings.
  • Busing program - they are very happy with it. 
  • Should we think about the current level of EBITDA as the new base vs what they saw last quarter?
    • Think it's a good base to look at and grow off of
  • Which segment has low hanging fruit?
    • Mid level and high end of the market
  • What kind of junkets would the Singapore government consider licensing?
    • Government is cautious but also pragmatic. Similar to the Australian junkets.
    • The process of licensing is just very lengthy, still hopeful to see licenses by 1Q2011
  • What kind of market growth is possible for next year?
    • Size of the market is really anyone's guess. They still see lots of potential.
    • Not sure how much junkets can grow the market
  • No view on Australia.  There is a possibility of dividend of payments. Lots of variables - like when and if the junkets come online.
  • Month before Chinese New Year is usually a very slow month so depending on how good Chinese NY's is determines whether the 4th Q is the strongest
  • Sheldon's thoughts on S$8BN in 2011?
    • Won't comment
  • Revenues from the Sinaporeans is very low.  Most of their high rollers are from other regions.
  • Non-gaming revenues margins are lower than 47% - much lower
  • Bad Debt - impairment loss on trade receiveble - related to Singapore ($23.5MM). Ratios are similar Q to Q
  • Goal for the Group is to build out the Resorts World brand
  • VIP RC volume was about the same as last quarter
  • Therefore casino receivables increased as a % of RC. Analyst calculated a 40% growth in receivables
    • Market mix is different from Q2 to Q3 so you can't look at it this way
  • Rough estimate of Chinese customers
    • At least 10-20% on the main gaming floor is acheiveable, but significantly higher in VIP

Did the US Economy Just “Collapse”? "Worst Personal Spending Since 2009"?

This is a brief note written by Hedgeye U.S. Macro analyst Christian Drake on 4/28 dispelling media reporting that “US GDP collapses to 0.7%, the lowest number in three years with the worst personal spending since 2009.”

read more

7 Tweets Summing Up What You Need to Know About Today's GDP Report

"There's a tremendous opportunity to educate people in our profession on how GDP is stated and projected," Hedgeye CEO Keith McCullough wrote today. Here's everything you need to know about today's GDP report.

read more

Cartoon of the Day: Crash Test Bear

In the past six months, U.S. stock indices are up between +12% and +18%.

read more

GOLD: A Deep Dive on What’s Next with a Top Commodities Strategist

“If you saved in gold over the past 20 to 25 years rather than any currency anywhere in the world, gold has outperformed all these currencies,” says Stefan Wieler, Vice President of Goldmoney in this edition of Real Conversations.

read more

Exact Sciences Up +24% This Week... What's Next? | $EXAS

We remain long Exact Sciences in the Hedgeye Healthcare Position Monitor.

read more

Inside the Atlanta Fed's Flawed GDP Tracker

"The Atlanta Fed’s GDPNowcast model, while useful at amalgamating investor consensus on one singular GDP estimate for any given quarter, is certainly not the end-all-be-all of forecasting U.S. GDP," writes Hedgeye Senior Macro analyst Darius Dale.

read more

Cartoon of the Day: Acrophobia

"Most people who are making a ton of money right now are focused on growth companies seeing accelerations," Hedgeye CEO Keith McCullough wrote in today's Early Look. "That’s what happens in Quad 1."

read more

People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more