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