Genting Singapore International Expansion Possible as Strong GGR Recovery Continues

Summary:

• Resorts World Sentosa continues to show robust recovery in VIP volume and mass market segment
• Its net profit for 1H of 2023 sat at SGD276 million, up 227% year-on-year
• Parent firm Genting could renew its international expansion plans given the upward revenue trend

Genting Singapore Ltd might consider expanding into other markets as the strong recovery in gross gaming revenue (GGR) continues.

That’s according to finance advisory firm Maybank Research Pte Ltd which this week released an update on the performance of Genting-owned Resorts World Sentosa, the other half of the existing casino duopoly in Singapore.

Resorts World Sentosa Continues Strong Performance

Genting Singapore previously announced its intention to participate in the bidding process for Japan’s first integrated resort (IR), with the operator eyeing to develop the project in Yokohama. But after the city decided to cancel its IR bid, Genting subsequently dropped the plan, fully redeeming its yen bonds amounting to JPY20.0 billion which it had publicly offered in 2017.

The company could recommence its expansion efforts soon as it continues to enjoy strong recovery following the COVID-19 pandemic. During the first half of 2023, Resorts World Sentosa recorded a net profit of SGD276.7 million (US$203.0 million), a massive year-on-year increase of 227.7%.

In a note, Maybank stated that VIP gamblers are continuing to visit and play at the casino complex despite the ongoing high-profile money-laundering probe in the country which reportedly involves SGD2.8 billion worth of assets.

One of the institution’s analysts, Samuel Yin Shao, noted that the flow of high-value gamblers at Resorts World Sentosa has so far remained steady, with VIP volume stabilizing at 87% of 2019 levels. Maybank also underscored the property’s robust recovery in terms of mass-market GGR from January to June this year, with the figure hitting 100% of pre-pandemic levels.

Additionally, flight seat capacity from China to Singapore as of September this year had recovered to 80% of 2019 figures, as per data from OAG Aviation Worldwide Ltd. That compares to the 60% recovery recorded in June.

Genting Singapore On Course for Expansion

Based on these results, the property’s parent company, Genting Singapore, is on track to generate an estimated SGD2.25 billion in revenue throughout 2023, along with SGD637 million in core net profit, Maybank said. Moody’s Investors Service also predicts the company to generate SGD1.4 billion in operating cash flow through to December 2024, which would be enough to cover SGD1.0 billion in projected capital spending.

According to Maybank, Genting Singapore could very well consider entering other markets once the projected internal rate of return exceeds 15% and returns on equity recover to more than 10%.