The return of travel by Chinese gamblers will benefit Genting Singapore, according to Maybank analyst Samuel Yin Shao Yang.
In a May 15 note, which followed the release of Genting Singapore’s first-quarter results, Yin said, “With seat capacity from China to Singapore recovering hastily, there is a lot of room for gaming operations to improve” in the market. Genting operates Resorts World Sentosa, one of two integrated resorts in Singapore, competing only with the Las Vegas Sands Corp.’s Marina Bay Sands.
As reported by Inside Asian Gaming, Yin’s note added that low hold and seasonal weakness put a damper on earnings in the final three months of 2022, pushing EBITDA down by one-fourth.
“Seat capacity from China to Singapore will improve further … by mid-year,” Yin said. “This should lower airfares and encourage more Chinese to gamble in Singapore.
“Furthermore, the newly renovated 389-room Hotel Ora reopened in April 2023. This will allow Genting Singapore to ‘comp’ more rooms to attract premium gamblers.”
Nomura analysts Tushar Mohata and Alpa Aggarwal said soft first-quarter results could cause a “negative knee-jerk reaction,” but they remain positive on Genting Singapore’s prospects.
“Inbound Chinese tourism still stood well below pre-Covid levels in 1Q23, and is only recovering gradually, due to slow flight capacity ramp-up and high airfares,” they wrote. “That said, we think they remain on the path to sustained recovery in 2H23 and FY24.”
Both Maybank and Nomura have retained a “buy” rating on Genting Singapore shares. But the Nomura team said Singapore’s casino duopoly could feel a hiccup in the coming months as premium players increasingly patronize Macau.
The number of people heading to Macau from Singapore and Malaysia has increased steadily since China reopened its borders on January 8. About 4,000 visitors from each country traveled to Macau in March. The analysts said many of these are likely to be VIP and premium-mass players.
“Premium players have a higher propensity to gamble in different jurisdictions because of better affordability,” they said. “In the near-term, this might lead to some gross gaming revenue which was ‘accruing to’ Singapore and Malaysia casinos to shift to Macau due to pent-up demand.
“Given Singapore’s more premium mix vs Malaysia’s most domestic-oriented customer base, we believe the impact will be somewhat more pronounced for Singapore casinos.
“However, we believe any negative impact of this GGR shift is likely to be minimized as the initial pent-up travel demand to Macau stabilizes after the first few months.
“Further, resorts in Singapore and Malaysia are likely to see a positive offset from incremental GGR from inbound Chinese tourists as their numbers scale up gradually.”
In April, Macau posted GGR of MOP$14.72 (US$1.82 billion), the highest monthly total since the Covid-19 pandemic began.
