In a Thursday report, analyst Yin Shao Yang says that while GENS may have ceded mass market share in 1Q17, he believes it will regain this in 2Q.
“RWS has been ceding mass-market gross gaming revenue (GGR) share since 1Q13 due to MYR weakness against SGD, we believe. Our research indicates a strong correlation between the two,” explains the analyst.
“We understand that RWS has more Malaysian mass-market gamblers than Marina Bay Sands (MBS) due to its Genting heritage. As the MYR/SGD weakened in 1Q17, we believe Resorts Sentosa (RWS) lost mass-market GGR share then. But, with the MYR/SGD recovering in 2Q17 thus far, we reckon it could regain its share in 2Q17.”
Noting that MBS’s 1Q17 VIP volume already grew 9% q-o-q in line with the growth of higher 1Q17 Macau VIP GGR, Yin expects RWS's volume to have grown too.
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“We gather that the retreat of major Australian and New Zealand casino operators, following the arrest of 18 Crown Resorts employees in China on 14 Oct 2016, has reduced competition for Chinese VIPs. This has enabled RWS to cut its direct VIP rebate rates, which can be significant as we estimate that every 10bp drop in such rates can add 55bps to group EBITDA margins,” says the analyst.
Maybank therefore factors in higher VIP volume and lower VIP rebate rates, lifting EBITDA estimates for GENS by 14-16%.
As at 3.12pm, shares of GENS are trading 1 cent lower at $1.08.
