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Spooking investors of other stocks as well.

Misery loves company.  Perhaps that's the reason why Genting spooked the market with commentary on the China credit situation after reporting a quarter with no volume growth and a large impairment charge partly ‘saved’ by high hold.  That comment certainly had an impact on the Macau stocks in yesterday's trading.

This marked the 3rd quarter in a row where RWS lost share in RC volume, Mass drop, and slot handle.  Rebates on Mass and VIP also increased this quarter while RevPAR decreased QoQ as did visitation to USS.  Will a new hotel with just 200 high end rooms, some neutered junkets (should they ever get approved), and the opening of a Marine Park and Museum significantly improve the static trends we’re seeing or will this property continue to be a share loser?


Revenue was 4% lower than our estimate while EBITDA was 14% below our estimate

  • Net gaming revenues were S$24MM below our estimate.  We estimate that GGR for RWS was S$975MM, implying 48% market share as the company stated on the call and that rebates, GST and gaming points (mass comps) were S$315MM.
    • Per company commentary and our calculations:
      • RC Volume market share: 44%
      • GGR share: 48%
      • Mass and slot share: 48% (roughly the same for slots and mass tables)
      • Gross VIP accounted for 53% of RWS’s GGR and 42% on a net basis
    • Total market GGR was S$2.04BN – a little below our estimate of S$2.1BN, which explains a large part of the miss
    • Gross VIP win was 7% below our estimate due to no sequential growth in RC volume, somewhat offset by better hold.  It’s disappointing to see RC decreases since 4Q10.  Management said that RC volumes were flat QoQ; our guess is that there was a slight decline to S$16.3BN.
      • Hold since opening has been 3.1% at RWS.  However, if we use the theoretical win rate of 2.85%, gross VIP revenue would have been S$52MM lower, and net VIP would have been S$49MM lower and EBITDA would have been S$46MM lower.  Of course, the high hold was offset by the bad debt charge of S$38MM which is ‘unusually’ high.
      • We estimate that rebate rate increased to 1.34% - a 10bps increase sequentially.  The company claimed that there was no change in rebate policy, but the numbers don’t lie; rebates clearly increased.  It could be that there were just less players that gambled greater amounts getting them higher rebates.
    • We estimate Mass win of S$308MM, 10% above our estimate due to better hold
      • Mass drop was flat sequentially around S$1.4BN.  Genting said that hold has continued to trend upwards for mass play.  We estimate that hold was 22%.
      • Gaming points increased to 4% of drop from 2.4% last quarter or a total of S$57MM
    • We estimate slot win was S$150MM and that handle ticked up slightly to S$3.1BN
  • Non-gaming revenue was S$12MM below our estimate due mostly to lower USS revenues
    • Given the results at MBS, we were surprised to a see a sequential RevPAR decrease at RWS – especially after all the talk of being room constrained.  Yes, MBS gives away rooms to gaming customers and perhaps RWS should follow suit on the 10% of vacant rooms that they have – especially midweek.  Location surely has something to do with the lower occupancy as well.
    • USS park revenues were S$9MM below our estimate given a material decline in QoQ park visitation
  • We estimate that fixed expenses were S$182MM in the quarter