http://www.straitstimes.com/archive/...spore-20140506

Record Q1 earnings for Genting S'pore

Mainboard-listed firm posts 97% surge in net profit of $228.5m

Published on May 6, 2014 1:13 AM

By Grace Leong


LADY luck has been smiling more on Resorts World Sentosa (RWS) than on premium gamblers, helping propel Genting Singapore's first-quarter earnings to a new record.

But the mainboard-listed casino operator, in an earnings call yesterday, said it is cautious about extending credit to customers amid uncertainty ahead of the Indonesian presidential election and signs of a slowing Chinese economy. Many of RWS' premium gamblers are from these two countries.

The company posted a 97 per cent surge in net profit of $228.5 million for the quarter ended March 31.

This is after allotting $29 million attributable to holders of perpetual capital securities.

Revenue jumped 24 per cent to $828.8 million from $669.6 million a year ago. Earnings per share was 1.87 cents, up from 0.95 cent a year earlier.

Its rival, Marina Bay Sands (MBS), raked in net profit of US$435.2 million (S$545 million) for the first quarter of this year, up 9.7 per cent from a year earlier. Net revenues were US$835.4 million.

Genting president and chief operating officer Tan Hee Teck told analysts yesterday: "Our rolling volume is heavily dependent on the region. From a macro-economic standpoint, 2014 will be challenging as China is going through some belt-tightening; Indonesia is going to have its presidential election in a few months and so its economy is stagnant, which affects the premium mass market.

"With the economies in the region seeming either flattish or going down, we have to be very cautious about extending credit to customers."

Also hurting mass market revenues is the significant appreciation of the Singapore dollar against the Malaysian ringgit and Indonesian rupiah.

"Although the number of trips per year is about the same, the amount wagered per trip has gone down."

"On the premium VIP side, currency appreciation is less significant a factor, although premium VIP players are increasingly asking for more favourable conversion rates when they repay us for credit."

Genting Singapore's gaming revenue soared 29 per cent to $671.9 million in the first quarter year on year, helped by higher VIP rolling volume and win percentage in the premium player business.

Non-gaming revenues gained 6 per cent year on year to $156.4 million from $148 million.

On Genting's investment in an integrated resort in Jeju, South Korea - a platform for the company to tap the mainland Chinese market - Mr Tan hopes to break ground by early July and have a soft opening for its first hotel by early 2017.

"We are quite optimistic about Jeju island. Firstly, mainland Chinese nationals going there don't need visas. Geographically, Jeju is easier to get to. It's only a one-hour flight from Shanghai."

Mr Tan said he sees challenges in the proposed passing of gaming legislation in Japan.

"The Bill will likely be debated in the Lower House at the end of the month. Once that passes, it will go to the Upper House in early June. The Upper House could be a bit challenging because the ruling party doesn't have a majority there."

Shares of Genting, which released its earnings after the market closed yesterday, fell one cent to $1.31.

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