Operator News
Singapore – Genting Singapore reports 79 per cent profit increase in 2017
By Phil - 26 February 2018
Genting Singapore, the operator behind Resorts World Sentosa in Singapore, experienced a fall in operating profit in its fourth-quarter earnings at casino operator although net profit for the year as whole increased 78 per cent to $685.6m from $384.5m a year ago.
Net profit for the three months to Dec 31 fell by 17 per cent to $132.8m, compared with $159.2m for the same period a year ago.
The group stated: “In 2017, we have recalibrated our credit policy and commission structure for the VIP gaming business. This is paying off and is proving to be a sustainable growth strategy. We are now able to achieve lower impairment on gaming receivables and improve operating margins.” For the fourth quarter of 2017, the Group saw a four per cent year-on-year increase in revenue underpinned by the stronger underlying performance of the leisure and hospitality segment as a result of higher business volume. The daily average visitation for the Group’s major attraction offerings, Universal Studios Singapore, the S.E.A. Aquarium and Adventure Cove Waterpark, enjoyed growth in a range from six per cent to nine per cent. Hotel business maintained a high occupancy rate of 91 per cent. The Group recorded a nine per cent year-on-year increase in its adjusted EBITDA of $255.1m and registered a net profit after tax of $134mfor the three months ended 31 December 2017.
The group added: “In 2017, the Asian gaming and tourism industry showed signs of rebound as a result of good economic growth in our main geographic markets. Together with a business strategy and plan that was well executed, especially in the gaming business segment, we have been able to significantly grow both our revenues and profitability. Our focus on the regional premium mass business saw good momentum in revenue growth. RWS is Asia’s leading premium lifestyle tourism destination, accounting for more than one third of international visitor arrivals to Singapore. We continue to plan and develop our offerings to yield quality visitors.
“During the year, we pioneered first-of-its-kind major lifestyle events in the region by seamlessly integrating gourmet experience and entertainment to tap into the growing affluent Asian market. Our world-class award winning attractions and hospitality once again affirmed our position as the Best Integrated Resort in Asia Pacific, with visitor levels and yields growing across all business segments. We will continue to curate and re-invest in new tourist facilities, and re-fresh existing products to remain attractive to our customers. In parallel, we are reviewing our processes and guest interaction touch points to identify areas where we can innovate to achieve a better customer journey in all our business segments.
“In December 2017, RWS re-opened Asia’s only maritime silk-road themed attraction, Maritime Experiential Museum, featuring brand new exhibits and entertainment content in immersive multimedia settings. We also unveiled TEPPAN by Yonemura, a Japanese fine dining restaurant helmed by Kyoto-born Michelin-starred chef-owner Masayasu Yonemura, with distinctive 3-in-1 theatrical dining concept, combining the artistry and showmanship of teppanyaki, flaming cocktails and flambé desserts. We are optimistic that the Japan IR Execution Bill will be tabled in this year’s Diet session which will pave the way for the formal bidding process for Japan gaming licence. The Group continues to be engaged in this significant business opportunity, and management is diligently preparing for the eventual bidding process. Many global gaming operators have pronounced their very keen interest to bid, and we will be facing fierce competition for the limited number of licences.”
Brokerage firm DBS believes the company’s rally can continue. “Our view is underpinned by expected positive newsflow including the continued recovery in earnings, details of a more efficient capital structure, refresh of Resorts World Sentosa, and bid for a Japanese casino,” it stated. “ Despite the recent turnaround in profitability, some investors remain sceptical over the sustainability of Genting’s earnings recovery. We believe as we progress throughout 2018, as Genting selectively extends credit to its VIP customers, which should translate to higher year-on-year increase in earnings, this scepticism should subside, resulting in a further re-rating of Genting’s share price.”
