We met up with the management representatives of Genting, Genting
Malaysia (GENM) and Genting Singapore recently, and also conducted a
site visit to Resorts World Sentosa (RWS). The Genting group is heading
towards a major milestone in 2015/2016 with its various ongoing
projects, and we are convinced of the Group‟s strength in execution. Key
takeaways are as follows:
GENS hitting a plateau? With all the main attractions in RWS now fully open, the non-gaming division is experiencing faster growth than gaming operations, accounting for 29% of GENS revenue YTD compared to 19% in FY12. Nonetheless, we opine that the main driver of its earnings, ie gaming, has most likely reached a plateau due to the following reasons; i) Limited gaming capacity; capped at a maximum of 15,000sqm floor space and 2,500 slots (including electronic table games), ii) Tight controls on Singaporean and PR visitations. Besides the SGD100 entry levy imposed on Singaporean residents and PRs, the Casino Regulatory Authority also has strict controls on marketing efforts aimed at locals, and iii) Stronger SGD an inhibitive factor for visitors from neighbouring countries and China.
New Jurong hotel targeted at mass market. The 550-room hotel in Jurong, scheduled to be opened in 2016, is positioned to be a no-frills, 3- star hotel targeted at mass market visitors. Room sizes range from 20- 25sqm, with room rates averaging between SGD200-250; significantly lower than average room rates in RWS but comparable to those on the mainland. Shuttle buses will be provided for hotel guests visiting RWS, which is only 20 minutes away. Meanwhile, we understand that despite the overwhelming popularity of RWS hotels (currently running at almost full capacity), GENS is not likely to increase room rates much in the near term, in order to stay competitive to hotels in mainland Singapore.
Gearing up for 2015/2016. The Group is heading towards a major milestone in 2015/2016, when most of its ongoing projects will come to fruition. Revenue and earnings in 2015/2016 will be boosted by the opening of i) Resorts World @ The NEC in Birmingham, UK, ii) Twentieth Century Fox theme park in RWG, iii) New 1300-room hotel in RWG, iv) New 550-room hotel in Jurong, Singapore and v) Banten power plant in Indonesia commencing operations.
Source: PublicInvest Research - 23 Sep 2013
GENS hitting a plateau? With all the main attractions in RWS now fully open, the non-gaming division is experiencing faster growth than gaming operations, accounting for 29% of GENS revenue YTD compared to 19% in FY12. Nonetheless, we opine that the main driver of its earnings, ie gaming, has most likely reached a plateau due to the following reasons; i) Limited gaming capacity; capped at a maximum of 15,000sqm floor space and 2,500 slots (including electronic table games), ii) Tight controls on Singaporean and PR visitations. Besides the SGD100 entry levy imposed on Singaporean residents and PRs, the Casino Regulatory Authority also has strict controls on marketing efforts aimed at locals, and iii) Stronger SGD an inhibitive factor for visitors from neighbouring countries and China.
New Jurong hotel targeted at mass market. The 550-room hotel in Jurong, scheduled to be opened in 2016, is positioned to be a no-frills, 3- star hotel targeted at mass market visitors. Room sizes range from 20- 25sqm, with room rates averaging between SGD200-250; significantly lower than average room rates in RWS but comparable to those on the mainland. Shuttle buses will be provided for hotel guests visiting RWS, which is only 20 minutes away. Meanwhile, we understand that despite the overwhelming popularity of RWS hotels (currently running at almost full capacity), GENS is not likely to increase room rates much in the near term, in order to stay competitive to hotels in mainland Singapore.
Gearing up for 2015/2016. The Group is heading towards a major milestone in 2015/2016, when most of its ongoing projects will come to fruition. Revenue and earnings in 2015/2016 will be boosted by the opening of i) Resorts World @ The NEC in Birmingham, UK, ii) Twentieth Century Fox theme park in RWG, iii) New 1300-room hotel in RWG, iv) New 550-room hotel in Jurong, Singapore and v) Banten power plant in Indonesia commencing operations.
Source: PublicInvest Research - 23 Sep 2013
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