Our meetings in Singapore signal optimism.
Following meetings in Singapore, we think it’s safe to say that business levels are very high at both Marina Bay Sands and Genting. The casinos were very busy as were the common areas of both properties. The tone of the meetings were very bullish. In fact, we think MBS will easily eclipse $300 million in EBITDA in Q4 versus our previous projection of $289m, which is in-line with consensus. We also now believe there is upside to our S$412m EBITDA estimate for Genting Singapore and consensus of S$403m.
Given the growth profile of the market, we are not overly focused on market share but both management teams definitely were. Genting reiterated its statements from Q3 conference call that they would maintain or gain market share. LVS firmly believes it will continue to grow its share from Q3 levels. Until junkets are approved, we would definitely side with LVS on this one as the property appears further from maturity. However, Genting is currently sponsoring 24 junket applications. We think junkets could grow the market by 10-15%. LVS is not sponsoring any junkets currently but will piggyback the licensing process for some junkets after if and when they get approved. The LVS wait-and-see approach is safer and lower cost but will allow Genting to own the junket market for 6-12 months upon approval from the Singapore government. Timing of approval is a major uncertainty and our best case is in 1H 2011 but we, and the operators for that matter, have very little conviction on timing.
Overall, we think the market can grow 10-15% without junkets, over the next 12-18 months. Mass is probably more mature at this point than VIP. However, both properties have more amenities coming which should result in Mass growing at a healthy premium to GDP growth. VIP, especially when aided by the junkets, is less tapped. The Singapore customer base – mostly Mass – probably won’t grow much, thus inhibiting Mass versus VIP.
Overall, we didn’t see/hear much negative. On to Macau!
