• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here


    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

Large bad debt provision hurt results. Cautious tone on credit and Macau.


  • Adjusted GGR grew 10% sequentially helped by a high 3.17% win rate while volumes remained stable
  • Slightly lower visitation was offset by increasing spend per visit
  • With close to peak occupancy, the pending opening of their new hotel will help complement their VIP business
  • They are entering the busiest period of the year now
    • Nov 3rd opening of December
    • West Zone openings
  • The tightening of lending in China is going to have a negative impact on VIP play.  They have already seen an impact of the tightening policies in China. As a result, they are provisioning more against their receivables.


  • RC market share volume: 44%
    • Have 200 luxury rooms coming online by the end of the year and then 20 more villas in the beginning of next year which should help their market share
  • Gaming will always be their core business.  They are very optimistic about some opportunities in Asia.  They are pretty optimistic that Japan will legalize gaming within the next 1-2 years.  The bill will be tabled in this current parliamentary session and voted on in the Spring Diet session.  Looks like there will be one or 2 licenses in Japan.
  • Nothing will happen in Korea for at least 7 months until after the presidential elections
  • Mass market share was 48%
    • Volumes in Mass were flat sequentially
  • No changes with commissions – stable
  • More optimistic that junkets will happen in the next few months
  • Doesn’t think that Macau can keep growing at the rate that it is growing given that China tightening is impacting the real estate business and that property prices have already started to come down.  That must have at least some trickling affect on to the players.
  • A higher provision rate than prior years? This year is already at a higher rate than last year.  Don’t think that they will see a continued rate of provision creep.
  • They were a little slow in ramping up to the max slot/ETG machines.  Will max out to 2500 by year end. They are also replacing some poor performing tables.  Their competitor has already maxed out their machines.
  • They are still looking at their receivables each month. They are taking a more conservative view on collections but they haven’t changed their methodology.
  • Their margins should be between 45-50% going forward for the next 4 quarters. Between now and 3Q12 they will have lots of pre-opening expenses and they are hiring a lot of people but there is no revenue.  So they won’t have stabilized margins until 4Q12/1Q13.
  • 570 tables right now - 1/3 VIP table
  • 1,315 slots, 544 ETG's. By YE, they will have the same # of tables and 1,744 slots and 726 ETGs
  • Not interested in partnering up in Miami; Genting Malaysia looks after NA so they would have no involvement there.
  • Yes, they are very active in North Asia.  They are interested in Korea.
  • They cannot pay dividends until the end of 2013 or 2014 under their bank covenant agreement
  • 48% market share was for Mass + slot; which was roughly the same for each segment
  • No meaningful adjustment needed for luck this quarter because of the bad luck provision
  • Maintenance will stay at $200MM
  • Extra hotel rooms should drive $2MM per day per hotel room of contribution - $713MM * 16-20% = $100MM of extra gaming revenue per year.
  • The villas can drive the Middle East and West Asian markets which they haven’t even tapped yet.  Think that they can also drive North Asian business along with the attractions opening at Marine Life Park
  • Mass market hold has been doing quite well and has been on an increasing trend
  • Split of VIP vs. Mass revenue: 53% of Rolling is gross and on a net basis VIP is 42% net
  • If they are tapped out on rooms why is it that their occupancy isn’t higher vs. what MBS is seeing – same question for ADR.
    • Anything above 90% occupancy you end of giving away your rooms for free on a same day policy many times.
    • They only have half the rooms that MBS has so they need to be more prudent in yielding their rooms than MBS
  • Equarius rooms pretty similar to Ritz Carlton Singapore rooms and the Villas will be 4x the size of their current 4 villas
  • ETG count at the end of 2Q:  543 tables, 1,290 slots, 496 ETGs
  • Change in the profile of their VIP players this past quarter? No
  • What kind of criteria do they look at when they decide how much receivables to write down?  They have a credit committee meeting every month and then decide if they need to write anything down.
  • 80-90% of their VIP customers come from overseas
  • Why is their Mass volume flat QoQ?
    • Even for Mass market, rooms also play a big part – since still a large % of their players are overseas
  • Sense is that the theme park is subject to seasonal trends around the school holidays but since they are just lapping the first year they are just learning about how to manage through seasonal patterns.  Once they open the Marine Life Park they will be able to bundle packages to get people to stay longer.
  • Total gross gaming revenue split – was 48% for them
  • 48% share: Mass drop
  • VIP turnover was flat QoQ
  • Since the average yield per machine hasn’t been increasing, why are they adding more machines?
    • Utilization of machines is different during different days and times of days.  During peak times, they are tapped out- so even if there are only 10-20 days a year where they are peaked out it makes sense to add more machines


  • Group revs: S$801.8MM, +10% YoY, attributed to higher VIP hold
  • Daily visitation to Universal Studio Singapore: 9,400
    • Average spending: S$84
    • Hotel occupancy: 89%; ADR: S$315
  • Adjusted EBITDA: S$375.6MM, higher VIP hold offset by higher bad debt by S$37.8MM
  • Development/construction at west zone of RWS
    • Equarius Hotel will open at end of 2011, with Beach Villas soon thereafter
    • The last phase will be complete by mid-2012
  • The economic uncertainties in Europe and the U.S. have presented challenges to the Asian economies. Amidst such volatile financial environment, we have exercised caution in our dealings and prudence in our approach.