GENTING SINGAPORE Q2 PREVIEW

While volumes will not be as strong as Q1, Q2 should prove out our projection of an annual EBITDA run rate well north of S$1 billion.

We estimate that RWS will report S$665MM of revenues and S$272MM of EBITDA for Q2.  Obviously, there will be some slow down in daily volumes compared to Q1, and lower win per position as more positions opened.  Longer term we believe the Singapore market could easily grow at 10% a year for the next few years.  If and when junkets get licensed, VIP revenues should grow at a faster clip than Mass since there are no junkets operating in Singapore.  While some junkets may get licensed by Q3, they are likely to be the Singapore-based junkets and are unlikely to grow the market materially.  The hotels and the theme park should be positive EBITDA contributors this quarter, albeit at lower margins than the gaming operations as they are still ramping. 

We believe our Q2 estimates are above Street consensus.  Here is how we get to our numbers.

Modeling Assumptions:

• Non-gaming revenues of S$97MM
  • Hotel
    • Average of 1,000 rooms operating at a rate of S$250 and occupancy of 70%
    • Assume that all 1,300 rooms are open by 4Q2010
  • Universal Studios
    • Spend per visitor of S$100 and 8k average daily visitors
    • Breakeven visitation of 6k/ day
    • Assume that by 4Q2010, daily average visitation increases to 12,000
• Net gaming revenue of S$557MM
  • Slot revenue:  S$128MM
    • 1,200 slots and electronic table gaming positions at an average win per day of S$1,170
    • Assuming a 8% win rate, slot handle in 1Q2010 was S$871MM which we believe will increase to ~S$1,600 in 2Q2010
  • VIP Gross revenue of S$350MM
    • Rebate rate of 1.2% & net VIP win of S$209MM
    • Assume 3% hold, which implies that the first 46 days produced RC volume of S$6.35BN 
    • We assume that RC volume in 2Q2010 grows to S$11.6BN
    • Increased # of tables to 115 from 100 in 1Q2010
  • Mass table revenue of S$220MM
    • Assuming a 22% hold rate, 1Q2010 drop was roughly S$535MM and we assume that 2Q2010 drop will be about S$1BN
    • Increased number of operating tables to 235 from 200 in 1Q2010