SOUTH EAST ASIA 18
SINGAPORE
Locals drive growth, but for how long? Singapore’s two integrated resorts surprised analysts with the strength of their most recent results, despite higher entry fees for locals and a lack of international travel.
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“That said, we are still positively surprised esults at both Marina Bay Sands and Genting Singapore beat expectations, by the extent of the recovery in gaming revenue both turning in a profit in the quarter. (only down 41 percent y-y) as that it is solely Marina Bay Sands recorded adjusted coming from local residents and is subject to property EBITDA of $70 million, while Genting capacity restrictions,” he said, referring to Genting. “Based on the trends reported by competitor posted a net profit of S$54 million. It’s an impressive performance for a market Marina Bay Sands (MBS), we estimate that VIP which relies heavily on international travel roll is still down ~80 percent y-y, whereas mass and where the entry fee for the local market table drop / slot handle are down 40 percent /20 percent y-y (VIP is more tourist driven).” was raised by 50 percent last year. Much of the local demand is in the premium Genting didn’t go into much detail as to the reasons for its strong performance, but analysts slots business. Las Vegas Sands’ management said they think the primary driver was pent- explained that the market is not so much up local demand following the reopening of local, as made up of expatriate residents. This clientele has favoured the casinos on July 1st. premium slot business over Morningstar analyst tables, unlike the local Jennifer Song said that market in Macau. government subsidies and Much of the “Premium slots seem cost cutting efforts are local demand to be stronger, a trend also likely to have helped seen in Marina Bay Sands to improve margins, with is in the which actually did report Genting’s EBITDA margin premium slots detailed gaming statistics,” coming in at 53 percent business. Nomura’s Mohata said. “This in Q3, compared with 48 is because even though percent a year ago. social distancing needs to “From management of be followed, the casinos some major Macau casino operators, we can see that at the beginning stage have some degree of flexibility in spacing out of casino or border openings, the high quality the slots over a larger area and use most of and frequent patrons will likely come back first, them, given demand for VIP and mass tables and we think Singapore casinos are likely the is lower. So within the allocated space for the same. So we think the strong recovery may casinos, there is some room to rejig the layout.” Despite the outperformance in the most also be led by the premium local customers.” Nomura was also surprised by the resilience recent quarter, analysts and management of the Singapore market, which in the past few alike said that for a full recovery, tourists need years has taken a back seat in terms of interest to return. The level of local demand also is unlikely to be sustainable longer term. to some of its faster growing neighbours. For 2019, the local market made up about 25 “At least some of the beat was due to reasons such as a pent-up demand after re- to 30 percent of demand for Genting Singapore, opening in July, hotel revenues for travellers while gaming revenue has already returned to serving Stay-Home Notice (quarantine) and 59 percent of pre-pandemic levels, Song said. “While we doubt whether the pent up Singapore’s Job Support Scheme,” analyst local demand will be sustained or not, we Tushar Mohata said.
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Asia Gaming Briefings | December 2020
