“While visitation from China remained subdued at 2% in 4QFY2022 and full-year 2022, we see the earlier-than-expected reopening in China as a positive to Genting Singapore, which could see a faster-than-expected recovery in 2023,” he adds.
Meanwhile, Maybank’s Yin Shao Yang, who has a “hold” call and a target price of 94 cents says Genting Singapore is undoubtedly one of the best Chinese tourism proxies on the Singapore Exchange. However, he is unsure if all the Chinese gamblers, especially VIPs, would return.
Yin had previously assumed that Genting Singapore’s FY2023 and FY2024 Resorts World Singapore (RWS) VIP volume would stabilise at 75% of FY2019 levels. The analyst had not expected the 25% shortfall to return due to China outlawing cross border gambling and its weak economy.
Maybank now assumes that half of the shortfall will return, while the FY2023 and FY2024 RWS VIP volume would stabilise at 88% of FY2019 levels. “Our conversations with industry insiders reveal that the cross border gambling ban will affect casinos that had utilised junkets more than RWS; and migration of wealthy Chinese to Singapore will help,” he adds.
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Yin had also revised his assumptions on gross gaming revenue (GGR), expecting FY2024 RWS mass market GGR to recover to 100% of 2019 levels. While he still believes that FY2024 will see more intense competition by regional casino operators for the regional premium mass market after being deprived of the Chinese VIP market; there will also be retention of Singapore gamblers in the country in addition to the return of Chinese mass market gamblers to compensate.
Meanwhile, Yin highlights that the Thai House of Representatives had on Jan 12 endorsed a report by a special committee studying the feasibility of allowing an entertainment complex to be built, which includes legal casinos for further consideration.
This could potentially pave the way for Thailand to legalise integrated resorts (IR), albeit two to three years from now. “If it does, we fear that Thai IRs will draw Chinese gamblers away from Singapore and call the financial viability of the $4.5 billion ‘RWS 2.0’ expansion into question,” he adds.
As at 11.07am, shares in Genting Singapore are trading 0.5 cents lower or 0.5% down at 98.5 cents.
