Resorts World Building Singapore Mass Market

Brokerage Sanford C. Bernstein says Genting Singapore, operator of Resorts World Sentosa, is well-positioned to grow its mass-market segment due to a “more diverse” mix of amenities.

EBITDA on the rise through 2018

Brokerage Sanford C. Bernstein Ltd. says Resorts World Sentosa, a Genting Singapore property, should be better able to grow mass-market GGR because it has “a good business mix and is generating strong cash flow driven by mass and nongaming.”

Lead analyst Vitaly Umansky forecast Genting Singapore’s EBITDA will grow at 9.4 percent from 2015 through 2018, reported GGRAsia.

“We forecast 55 percent-plus of its GGR will come from higher margin mass, while over 23 percent of Genting’s net revenues derives from non-gaming, nearly double that of Venetian Macao, which has the largest nongaming component in Macau,” wrote the Sanford Bernstein team.

The brokerage acknowledged concerns about “VIP weakness and increasing bad debt impairment” at Resorts World Sentosa. To its credit, the resort includes a Universal Studios theme park and Marine Life Park as well as a casino.

It is also taking steps to address its credit policy. It has “become more disciplined in credit-driven VIP volume generation,” wrote Umansky. “Given benefit of such tightening, we would expect to see gradual improvement in the collections of its receivables.”

Despite the appreciation of the Singapore dollar against the currencies of feeder markets such as Malaysia and Indonesia, the analysts saw near-term success in Sentosa.

“We see continued VIP headwinds and some risk associated with currency depreciation in the key feeder markets (in particular, Malaysia). However, Genting Singapore remains a cash generation engine, which has been negatively impacted by low hold in recent quarters. We continue to view the Singapore gaming market as stable in the face of headwinds and forecast modest growth in 2016,” said Umansky.