Tuesday, February 22, 2011

Performance from Genting Singapore not up to expectations

Genting Singapore reported its final quarter results today. In its report,

"Revenue was registered at S$788.5 million and adjusted EBITDA was S$385.6 million.
Singapore IR contributed revenue of S$775.2 million for the fourth quarter of 2010, an increase of 6% from the third quarter of 2010. The improvement in the revenue is substantially contributed by the increase in the volume of premium players‟ business with significant contribution from USS and the hotels. There was a daily average of around 8,300 visitors to USS with an average spend of S$85 per visitor. RWS‟ hotel occupancy for fourth quarter of 2010 was 79% with an average room rate of S$294.
Adjusted EBITDA of Singapore IR for the fourth quarter of 2010 was S$389.8 million. This is an improvement of the margin from the third quarter of 2010 and is attributable to the increase in revenue. It is, however, diminished by a lower luck factor in the VIP business compared to the third quarter."

As a comparison Sands Singapore registered a USD305.8 million (S391.4 million) EBITDA. Hence, results from both seems to be almost identical.

The poorer performance seems to be the case, as while the government is attracting more visitors to visit Singapore as a tourist destination, at the same time they are trying to reduce its own people from visiting the casino that often. Seems to me the above expected performance registered in the 2nd quarter may be due to Genting Singapore was using the opportunity to make the most out of it as it was the only casino in the country during then as Sands was late to open.

Over time as I was expecting results to constantly improve at above average speed (>10%), the competition between Sands and Genting is a healthy thing as who will ultimately be winner is Singapore, the country itself. Remember, Singapore is just a small little country with its country within the city and vice versa. If you compare Vegas as a metropolitan, what was Vegas 50 - 60 years ago? Despite the downturn during the financial crisis, Vegas is the fastest rising metropolitan in US over the last 50 years! Given half what Singapore can achieve as a destination for gaming or even convention for Asia as compared to either Vegas or Monte Carlo, you will see these related businesses thriving.

This is a two horse race but both can turn out to be winners. Remember, this blog is into finding winners!

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