Lower VIP volumes on the back of China’s slowing economy saw Genting Singapore’s revenue, Adjusted EBITDA and net profit all suffer declines in 1Q19, despite a quarter aided by good luck.
Revenue at Resorts World Sentosa (RWS) for the three months to 31 March 2019 was SG$640.4 million (US$469.4 million), down 5% year-on-year, with Adjusted EBITDA falling 8% to SG$329.7 million (US$241.6 million) – although EBITDA was substantially higher than the SG$286.0 million reported in 4Q18. Net profit after taxation fell 5% to SG$205.5 million.
The results followed a 19% decline in VIP volume to SG$7.6 billion (US$5.57 billion) for the period, with management pointing to Chinese uncertainty and geopolitical frictions which it says “continue to cast a cloud of uncertainty for 2019.”
In his results recap, Union Gaming’s Grant Govertsen also suggested customers were patronizing other regional properties in relatively close proximity to Singapore, estimating a full-year decline of 12% in VIP volumes at RWS in 2019.
RWS saw its Singapore VIP market share fall to 44% in 1Q19, down from 47% in the fourth quarter of 2018.
Govertsen estimates that mass GGR grew by around 3% for the quarter, but adds, “we are not optimistic on this segment for RWS in the context of recently enacted higher entry levies, which we believe will weigh on both revenue and margin. Even prior to the enactment of higher levies, some number of mass customers were trialing other regional properties and we expect this dynamic to increase over the coming months as these properties can increasingly offer compelling value even for lower-tier customers.”
Genting Singapore recently announced an impending SG$4.5 billion expansion of RWS, adding more gaming and non-amenities plus another 1,100 hotel rooms which are expected to come online by 2024.