Genting hits Singapore
with currency headwinds
Genting hits Singapore with currency headwinds
Union Gaming Securities Asia Ltd said the third-quarter earnings of Genting Singapore Plc, which operates Singapore's casino property resort World Sentosa, were likely to be negatively affected by "continued currency headwinds in two key customer regions, Indonesia and Malaysia."
"In the first two months of the third quarter of 2015, the Malaysian ringgit and Indonesian rupiah fell more than 10% and 4% year-on-year, respectively, against the Singapore dollar," noted analyst Grant Goversen. 바다이야기
"These currency headwinds will have a negative impact on VIP and China market trends, which will only be partially offset by the nearly 10% appreciation of the Chinese yuan against the Singapore dollar over the same period, although the Chinese yuan strength will mainly apply to the VIP sector."
To better reflect this trend, Union Gaming lowered its estimate for Genting Singapore. The company lowered its previous forecast for casino operators' EBITDA (earnings before interest, tax, depreciation and amortization) by 3% to S$272 million ($192 million) and S$266 million, respectively, in the third and fourth quarters of 2015.
Union Gaming currently expects Genting Singapore's 2016 EBITDA of S$1.21 billion, a 2% cut from the company's previous forecast.
"I think Resort World Sentosa is doing more to attract more popular market Malaysian customers (premium and non-premium), including the recent opening of a new hotel in Jurong Town on the main road between the border with Malaysia and Resort World Sentosa," Mr. Goversen said.
"But given the recent sharp drop in the value of Malaysia's ringgit, we believe this will have a negative short-term impact on the visit to Malaysia and the subsequent total gaming revenue (and non-gaming revenue) of Resort World Sentosa," he added.
Earlier this month, Fitch Singapore Pte Ltd said the outlook for the Singapore casino gaming industry continued to be "stable." The rating company noted that the EBITDA margins of two Singapore resorts, Resort World Sentosa and rival Marina Bay Sands, developed by Las Vegas Sands, were "over 30%."
Genting Singapore swung to the red in the second quarter of 2015 with a loss of 16.9 million SGD from 122.3 million SGD a year earlier. Revenue fell 23% Y/Y to 578.1 million SGD.