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Huge quarter but upside from consensus was all due to high hold.

"The first quarter 2011 revenue are good as a result of the execution of our overseas marketing plans. The enhanced product offerings and service excellence that our customers demand, will allow us to build significant brand equity over time as the foremost destination resort in Asia."

HIGHLIGHTS FROM THE RELEASE

  • Genting Singapore IR 1Q11 detail (S$MM's):
    • Casino revenue: 804.4MM
    • Non-gaming non-gaming: 109.154MM
    • Adjusted EBITDA: 537.9MM (59% EBITDA margin)
  • Group revenue was S$922.6MM and Adjusted EBITDA was S$529.4MM
  • "Singapore IR experienced good win percentage and gaming volume in the first quarter of 2011 with steady growth in Universal Studio Singapore (“USS”) and the hotels."
  • USS daily average visitation: 7,400 and average daily spend per visitor was: S$88 per visitor
  • Hotel occupancy: 79% and ADR: S$280
  • D&A: S$76.6MM
  • "Higher finance costs of S$39.7 million was mainly due to charges related to the refinanced syndicated loan facility"
  • "Higher taxation of S$77.4 million in the first quarter of 2011 mainly from the higher deferred tax expenses due to temporary difference in property, plant & equipment."
  • Capex in the period was S$0.46BN
  • "Our Casino VIP rolling market segment continues to be a major contributor to the total gaming revenue with growth compared to the previous quarter at 19%. The Casino VIP rolling revenue is now 62% of the total gross gaming revenue."
  • "We are delighted that we have been able to attract record volumes of overseas visitors to our resort, and Universal Studios Singapore continues to be a major draw for the young and not so young from around the region."
  • "Hotel occupancy has been good and our bundled products have been extremely popular. Quarter 2 bookings continue to be encouraging and we look forward to a strong summer holiday season."
  • "We are encountering some unforeseen difficulties which may delay the completion of the second phase. However, we are addressing this issue and have allocated resources to catch up with the schedule."

CONF CALL NOTES

  • Next week, Journey from Madagascar will open and USS will celebrate its grand opening
  • VIP net revenue market share has grown from 65% to 68%
  • They believe that the Mass market has entered a steady state, and therefore will not show big growth with aggressive marketing and comps to the local population which they won't do
  • 3.8% hold rate this quarter helped achieve their high margin this quarter
  • Gaming revenue was 88% of total rev
  • No update on junket approvals
  • MICE team did over 670 events, making the IR one of the 3 most active MICE players.
  • Maritime Museum is set to open in the quarter, which should be a big attraction

Q&A

  • Rolling was 60% of their revenue, non-rolling was 40% - so they still have the majority market share in both segments
  • There will definitely be organic growth in Mass, but it has usually tracked GDP plus around the region
  • Long term stabilized margin target is still between 45-50%
  • Was there a sequential decline in the RC volumes?
    • RC volume declined sequentially and they expected that given that when people lose faster they roll less
  • Post Golden Week, they are still quite happy with business
  • Delays on PH2?
    • There are minimal capex implications
    • The delay is a few months due to design enhancements
    • The delay is specific to just a few components - but they wouldn't elaborate
  • Any thoughts on a clamp down post election?
    • They will not pursue any marketing campaigns targeted at the local market
  • Level of write-offs?
    • Ratio of the provision of bad debt vs. receivables has come down
  • Seasonality?
    • Still hard to say until another year or so
    • Will be opening parts of the West zone in the 2H11 which will positively impact the visitation to the resort
  • Taxes is their largest expense, followed by primarily fixed labor expenses (20% is variable / 80% fixed). They don't see any significant expense increase.
  • ETG's increased by about 150 machines. They are getting a little better than organic growth on the ETG side. The max is 2,500 and they are at 2,000 ETGs
  • The restriction on their gaming floor is the restriction on SQFT on the main gaming floor - they are always tweaking the mix to maximize revenues
  • 589 tables at 3/31/2011 (30% are VIP); 1,437 slots, 363 ETGs
  • Interest expense: The facility is already fully drawn down. Going forward the interest expense will be a little lower because this quarter includes a refinancing fee
  • Market share for RC volume was 59% vs 4Q share was 67%
  • How much of their gaming SQFT have they used so far?
    • 90%
    • Still in the planning stage for the rest
  • There was a reduction in construction payables this quarter
  • What's the residual capex for the West Zone?
    • 1Q capex wasn't for west zone - so there is still S$700-800MM to be spent of which S$100MM has been spent
  • VIP net revenue was 50% of net total gaming revenue and 62% at the gross level of total gaming revenue
  • The commission rate was slightly lower than last quarter - they are not buying the business or increasing commissions
  • VIP demographics - the market segmentation is still similar and don't see material shifting
  • Allocated minimal space to poker on their floor. They will continue to tweak their mix on on the floor to maximize win
  • First quarter they have collected a lot more of their receivables than last Q - less than 40% of receivables are past 30 days due
  • Mass market drop was pretty flat but they held pretty well
  • Would EBITDA have been S$400-410MM for the Q if hold was 2.8%?
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