We’re expecting another disappointing quarter from Genting. 



Our property level EBITDA estimate of S$390MM is about 5% below consensus.  Based on our proprietary analysis of government tax data, we believe that the Integrated Resorts in Singapore generated Gross Gaming Revenue (GGR) of S$1.94BN, down 5% QoQ but up 13% YoY.  MBS reported GGR of S$1.01BN, implying that RWS produced only S$930MM compared to S$975MM in 3Q11. 


Part of the issue is that Singapore growth may be somewhat tapped out as we wrote about in ‘SINGAPORE Q3 REVIEW’ on 11/11/11.  RWS also experienced a several week delay in the grand opening of the Equarius Hotel and Beach Villas (opening tomorrow) and its slot/EGT expansion – both originally slated to open by Christmas.  We suspect that management walked down Q4 expectations in January but it looks like numbers still need to come down.  We noticed a change in tone from when we spoke with the company in mid-January, compared to the tone in late November.  In late November, their expectation seemed to be for a big sequential increase in VIP similar to Q4 2010.  However, management was much more cautious in January – shifting the focus on what they need to do to get Phase 2 of their resort open later in 2012 rather than near-term growth.





We estimate that RWS will report net revenue of S$769MM and EBITDA of S$390MM.   RWS did S$375MM of EBITDA last quarter on S$789MM of revenues which included a large bad debt charge of S$38MM.  Without the abnormally high bad debt charge, 3Q EBITDA would have been S$408MM. However, 3Q also benefited from high hold of 3.17%.

  • Gaming revenue, net of commissions of S$626M
    • Gross VIP revenue of S$485MM and net revenue of S$254MM
      • We expect RC volume to increase sequentially to S$17BN, down 21% YoY due to more conservative credit extension and the proximity of Chinese New Year to Jan 1.  This likely reduced what could have been two VIP visits to versus just one last year.  Last year, RC volumes increased 39% from 3Q to 4Q.
      • Hold of 2.85%
      • Rebate of 1.25%
    • Gross Mass table of S$297MM and S$239MM net of gaming points - Gaming points equaled 4% of drop or S$58MM
    • $152MM of slot and EGT win
      • The incremental slots/EGT expansion was installed the second week of January vs. by Christmas as originally scheduled
  • Non-gaming revenue of S$144MM
    • Hotel room revenue of S$35MM
      • There should be a sequential pick up in occupancy due to the holidays
    • S$23MM of F&B and other revenue
    • USS revenue of S$86MM
      • Transformers opened on December 3rd
      • The quarter also benefited from school holidays
  • Gaming taxes of S$89MM
  • Implied fixed costs of S$181 – similar to last quarter

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

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more