GENTING SINGAPORE 2Q 2014 CONF CALL

08/14/14 07:05AM EDT

An EBITDA beat when excluding the impairment charge but the bad debt write off is a concern as is the cautious forward commentary.


Q & A

  • Japan
    • Osaka:  a lot more interest lately. 
    • Tokyo governor have hands full with 2020 Olympics.
    • Still believe there are 3 candidates:  Osaka, Tokyo, Okinawa.
    • Categorically denied any discussions with USJ regarding a JV.
    • Japan:  optimistic the bill will pass in November/December.  Japan officials open to an accelerated process.  Genting believes there will be only one operator.  Osaka will probably go first but need approval of federal govt.
      • Is it imperative to have a local partner?  Don't think this so.  1 or 2 Japanese companies want majority ownership of IR.  Genting says operating a casino is difficult and feels those companies would need guidance.
      • Osaka investment:  $5bn seems to be the benchmark
      • Tokyo investment:  $10bn seems to be the benchmark
  • 2Q Bad debt (impairments) $81m:  made special provisions this quarter relates to debts which were 9-12 months past due. Very prudent. Still believe situation in major core markets are soft and challenging. Believe the $81m is an one-off.
  • Excluding bad debt provision, EBITDA margin would have been at normal level
  • Impairment:  
    • Relating to 9-12 months debt
    • Still within acceptable ratio band.  Will be sensitive to macro environment.
  • Market will be quite challenging in the next 6-12 months
  • VIP win %:  normal at ~3%
  • Mass win %:  24%
  • GGR share:  49%
  • RC Volume share: 60%
  • Mass/ETG drop share:  44%
  • VIP/MASS rev split:  57%/43%
  • Korea Jeju project:  central govt fully support IR; Jeju governor supports the project as well.  Would like to start construction in 1Q 2015.  Genting's share of capex of $2.5bn:  <$500m.   Will provide more numbers later this year.
  • Landing development's other contract:  Hyatt hotel in Jeju;  Genting in discussions with them on this.
  • If the Hinderlands (Northern remote provinces of China) do well, Macau will do well.
  • Not overly concerned about the long-term prospects
  • More Chinese customers?  Not really. Numbers in-line with expectations.
  • Some softening in VIP market in next 2 quarters
  • 2Q Non-gaming revenue decline:  Aquarium did poorly.  Putting in some exotic animals in the aquarium.  Believe Q4 2014 or onward will see numbers some back.
  • Visitor arrivals:  Chinese visitation has dropped but quality of visitors have been slightly better.
  • RC Volume:  been maintaining similar levels.  
  • Opex change:  due to net exchange loss of $36m and also higher operating income in 2Q 2013
  • Singapore mass:  continue to see flat trends
  • Marine Life Aquarium:  7,000 visitors, average spend $32
  • USS: 10,000 visitors; average spend $80
© 2024 Hedgeye Risk Management, LLC. The information contained herein is the property of Hedgeye, which reserves all rights thereto. Redistribution of any part of this information is prohibited without the express written consent of Hedgeye. Hedgeye is not responsible for any errors in or omissions to this information, or for any consequences that may result from the use of this information.