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Genting and Singapore market growth coming into question.

Adjusting for a whopping 3.9% hold, this quarter was quite a disappointment.  Combined with LVS’s relatively weak performance at MBS, Q4 confirms what we have suspected for a while now – that Singapore is no longer a rapid growth market, unless more rooms are added or junkets are approved.  Combined, the Integrated Resorts in Singapore grew GGR 12% YoY but declined 6% sequentially.  The lackluster 4th quarter results were not even that good since market hold was a record 3.6%, compared to an average of 3.0% over the last 2 years.  If the market held at 3.0%, the sequential decline would have been 14% and YoY growth would only have been 3%.  The lack of commentary of how spectacular January/CNY was this year by either IR suggest that 4Q results may be the new norm. 

Aside from disappointing results, the most interesting new news today was that Genting clearly has been doing some serious development work – including raising financing for a new project  which it will likely announce in 2H2012.  If we had to guess, the project(s) are in either Vietnam or S. Korea, since Japan legislation and approval is still a while away.  Of course the US is also a likely possibility, but we think that that is less likely.

Genting Singapore Q4 Detail:

While we have not spoken with Genting management yet, here are some of our preliminary observations on the quarter.  We estimate that gross gaming revenue (“GGR”) was S$899MM, which is in-line with management’s assessment of garnering 47% GGR share

  • VIP gross revenue of S$465MM and net VIP revenue of S$286MM
    • 52% of GGR and 44% of net casino revenue of S$645MM
    • RC volumes of S$12BN, down 26% sequentially and 44% YoY
    • Hold of 3.9%
    • Rebate rate of 1.32%
  • Gross mass table revenue of S$282MM and net mass table revenue of S$225MM
    • We estimate gaming points were S$47MM or 3.4% of our estimated drop
    • Estimated drop of S$1,375MM and win of 20.5%
  • S$152MM of revenue from gaming machines (slots & EGTs)
    • Estimated handle of S$3BN
    • Estimated win % of 5%
  • S$254MM of rebates, GST & Gaming points
    • GST: S$48MM
    • VIP Rebates: S$159MM
    • Mass gaming points: S$47MM
  • Non-gaming revenue of S$138MM
    • Hotel room revenue of S$34MM
    • F&B and other revenue of S$22MM
    • USS revenue of S$81MM
  • Total expenses of S$377MM
    • Gaming taxes: S$83MM
    • Estimated fixed expenses: S$185MM – in-line with 3Q11