KUCHING: Genting Singapore Plc (Genting Singapore) is set to register a stronger second half of the year following its expected full opening in the second quarter of 2012 despite a minor delay in the launching of 620 new electronic table games, 200-room Equarius Hotel and 20 beach villas at Resorts World Sentosa (RWS).
“The hotel rooms will be released gradually with full launch by the end of the second quarter. While missing the peak Chinese New Year season could lead to slower growth, RWS could gain VIP market share in the fourth quarter,” HwangDBS Vickers Research Sdn Bhd (HwangDBS Vickers) stated in its research report.
The research house’s predictions were based on its belief that Marina Bay Sands (MBS) was more cautious with credit and guiding for double-digit rolling chip contraction. RWS would soon have 2,470 slot machines, comparable to MBS.
The western zone of RWS was reported to be on track for completion with final launch of Marine Life Park and Equarius Water Park by mid-2012.
Thus, RWS would be fully opened by the mid this year with 10 per cent spare capacity to accommodate junkets should licenses be approved.
“For Genting Singapore, we do not expect another spike in receivables provision it its upcoming fourth quarter 2011 results, although management remains cautious about credit extension,” the report said.
However, it went on to address the possibility of margins being marginally affected by pre-opening expenses for the upcoming western zone, but remained at 45 to 50 per cent for the quarter.
HwangDBS Vickers noted that the first two days of Chinese New Year saw a crowd of about 125,000 visitors in the casino. Hotels were also running at full occupancy, with forward bookings up to end February looking strong despite rates breaching S$400 per room night.
“With strong operating cashflow of US$1.3 billion per annum and US$184 million net cash position, Genting Singapore is actively seeking investment opportunities including hotels near Sentosa Island and integrated resorts licenses,” the research house noted, though it believed that it might only pay dividends after 2013 due to its debt covenants.
Its Malaysian counterpart, Genting Malaysia (Genting Malaysia) similarly saw a strong crowd at its casino as hotel rooms and carparks were full with rack rates at above RM240 per room night.
The research house observed that visitors arrivals had been recovering as Genting Malaysia focused more on its worldcard members and refurbishing of its tired properties with some new gaming areas installed.
For Genting Malaysia’s expansion plans in the US, capital expenditure for its US$4 billion Resorts World New York Phase 2 and US$3.8 billion Resorts World Miami would likely be in phases, with funding possibly via project financing with rights issue as a last resort, HwangDBS Vickers predicted.
Based on Genting Malaysia’s track record and prudent management style, the report stated that net gearing was not expected to surpass 50 per cent, while target return on investments would be a minimum of 15 per cent.