GENTING SINGAPORE: HIGH HOLD SHOULD CONTRIBUTE TO BIG BEAT

In a reversal of recent disappointments, we’re expecting a big beat from Genting Singapore this quarter.  Unfortunately, high hold may have lent a helping hand this quarter.

 

 

Our call for a big quarter is largely predicted on our proprietary analysis of Singapore betting tax data.  According to the January and February data, 1Q12 GGR should contribute to an all-record number, with QoQ growth of at least 10% or S$2.1BN.  MBS reported GGR of S$1.1BN, implying that RWS produced about S$1.0BN compared to S$903MM in 4Q11.   RWS’s 4Q benefited from a huge hold rate as did MBS’s 1Q12.  We think Genting’s 1Q12 numbers were also the beneficiary of lady luck.

 

We estimate that Genting Singapore’s RWS will report property level net revenue and EBITDA of S$843MM and adjusted EBITDA of S$445MM, 9% and 21% ahead of consensus, respectively.  

 

Details:

 

RWS did S$406MM of EBITDA last quarter on S$782MM of revenues which benefited from a huge hold rate.  If our GGR estimate is in the ballpark, we believe that the incremental S$100MM of GGR should easily produce an extra S$39MM of EBITDA, even if fixed expenses creep up QoQ.

  • Gaming revenue, net of commissions of S$698M
    • Gross VIP revenue of S$541MM and net revenue of $313MM
      • We expect RC volume to increase sequentially to S$15.5BN, but still be 18% below a record number produced in 1Q11
      • Hold of 3.5%
      • Rebate of 1.33%
    • Gross Mass table of S$286MM and S$236MM net of gaming points
      • Gaming points equal to 3.75% of drop or S$50MM
    • S$178MM of slot and EGT win
      • The incremental slots/EGT expansion was installed the second week of January so the quarter should have benefited from healthy growth
  • Non-gaming revenue of S$145MM
    • Hotel room revenue of S$38MM
      • Hotel revenues should see a sequential lift with the added capacity of the Equarius rooms
    • S$25MM of F&B and other revenue
    • USS revenue of S$82MM
  • Gaming taxes of S$91MM
  • Implied fixed costs of S$195MM compared to S$185MM/Q in 2H11

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