Solid and in-line quarter but should've been better. VIP volumes were huge but were offset by lower Mass/Slot (not surprising) and higher fixed costs (surprising) which had been trending lower.
COMMENTARY
- VIP RC: thinks that the growth in volume will continue
- Reason for the loss on impairment trade receivables: In line with the roll and the revenues. The company decided to be prudent.
- VIP RC: hold was just marginally above the theoretical. Q3 was up 58% YoY and 15% QoQ volume wise
- Looking at opportunities in gaming and "leisure" (theme parks/attractions) "very seriously". Hope that something materializes within the next 12 months.
- ROI on USS? Too complicated to calculate within their structure. Hurdle rate is 12% IRR.
- Tokyo vs Osaka as sights: Both cities are great. Osaka is the 2nd largest city in Japan. Tokyo has a large population. Osaka has an emergent base population/trading city. They like both locations.
- Is the full cost of the water park reflected in the margins? There is still a little more to go in terms of improvement since they have not reached steady state visitation. The parks are mostly fixed costs so margins are highly dependant on volumes. Thinks that the margins are getting better. In the early part of 2013 they were still trying to organize the place better.
- Japan: the bi-partisan committee met last month. There is another meeting in 2 weeks, where hopefully they can get the approval of the various parties and something can be send to the cabinet this session. They do not believe that the bill will be passed in this Diet session but will be passed in the next Diet session early next year. They believe that there will be some entry levy for locals. Clarification: doesn't think that that there will be enough time to debate the bill since the session closes on December 6th. But do believe that it will be introduced. Believe that from January-April in the next Diet session, the bill will pass. Hope that the bill will pass around March 2014.
- VIP RC volume share (& revenue share): 54% and non RC share: 44%
- Growth (RC) is coming from all over the place not just China
- They are more positive on their outlook this Q than last Q
- Why was admin expense up so much? Increase was mainly due to additional expenses from property tax
- $210MM investment securities? Ponte 16: that $210MM is a net total - amount purchased vs. disposed. $570MM and $930MM. The amount disclosed on Ponte 16 is just the pure nominal amount on what they have spend? All of their investments and financials instruments are included in their available for sale securities.
- What % of total net revenues was VIP: 45% and 60% of gross
- Should see the steady state margins by 1Q14. Win %'s will really sway margins. For a normal theo win, they should have about a 45-46% EBITDA margin
- Thinks that 20-30% VIP growth for 2014 is overly optimistic
- They should know about other development opportunities in Asia within the next few months.
- View of the Olympics in Tokyo - does this help or hurt prospects of a resort hotel? Believe that it will help assist in the vibrancy of Tokyo
- Mass win was lower by 10% on a QoQ and YoY basis and slots were about 5% lower YoY or 9% QoQ. The declines are volume related.
- Hold for VIP was around 2.9-3.0%
- No change in commission structure this Q
- Growth out of SE Asia - is there any junket (IMA) benefit? No real benefit from IMA.
- They sold their London High Street property - have no more of those
- USS: 9,900 daily; 8,800 for MLP. Average spend: $84/ and $28 for MLP
- $84MM gain from the sale of the UK property
HIGHLIGHTS FROM THE RELEASE
- Resorts World Sentosa (“RWS”) revenue and Adjusted EBITDA for the third quarter of 2013 increased by 17% and 15% year-on-year to S$776.4 million and S$348.3 million respectively
- The gaming business segment continued to report higher volume in the premium player business.
- The non-gaming segments registered healthy growth with strong visitation.
- Attractions enjoyed a daily average visitation exceeding 18,000, while the hotels achieved an occupancy rate of 94% with average room rate at S$405.
- Our gaming business recorded 15% year-on-year growth, driven by increased visitation and new VIP
customers’ interest. - At ACW, we officially launched the Dolphin Island interaction programmes.
- The construction of our new hotel in the Jurong Lake District is progressing on schedule. Piling works are scheduled to complete soon, followed by super-structure work before year-end.
- The current global economic environment is still relatively unpredictable. The continued weakening of regional currencies versus the Singapore Dollar continues to make Singapore a more expensive destination for our regional customers. Like many Singapore companies, we also face a tight labour market. To address these challenges, we continue with our efforts to improve productivity yet not sacrificing customer service and re-engineer our processes.
- At Genting Singapore PLC, we are seriously pursuing opportunities in the gaming, leisure/entertainment and hospitality sectors in the region. Such projects are appealing where the development complements our existing competencies and the projected returns are significant to our corporate objectives. We continue to monitor with great interest the legislative passage of the Integrated Resort Execution Law in Japan.
