Gaming sector
Singapore is expected to surpass Las Vegas as the world’s second largest gaming market with US$7 billion (RM22 billion) gross gambling revenue (GGR) in 2012 (2011E: US$6 billion). Marina Bay Sands (MBS) is leading now, but Resorts World Singapore should catch up as it ramps up slot operations (+33% to 2,470 machines, comparable to MBS), and gradually opens the Western Zone (targeting higher-end VIPs).
Genting Singapore could be an early beneficiary of junkets (if licences are approved) given Genting Group’s long relationship with Asean junkets. Malaysia GGR should remain resilient driven by locals (70% of visitors are day trippers) as Singapore novelty factor recedes.
Genting Malaysia Bhd will have a new growth engine in Resorts World New York (16% of 2012F earnings), but Miami remains a long-shot for now (complicated legislature amendments, competing bids from global casino operators).
Rising credit risk amid heightened economic uncertainties could see higher receivables provision/impairment and deleveraging. Singapore is more vulnerable as the VIP segment constitutes 50% of GGR (purely direct VIPs), while Malaysia’s exposure is only 35% (via junkets).
Singapore Integrated Resorts may also be affected by slower discretionary spending given higher reliance on tourist arrivals (two-thirds of visitors are foreigners).
Sales have proven to be resilient irrespective of economic cycles, being a small-ticket item. We estimate 2012F revenue growth at 5% (1x GDP growth) driven by rising 4D Jackpot sales, which should also lower average prize payout.
Berjaya Sports Toto Bhd’s (BToto) revenue market share will likely inch up to 42% (Multi-Purpose Holdings Bhd: 34%) as its 4D Jackpot game launched in June 11 gains ground (advantage of more outlets, including in Sabah).
Our top picks for Malaysia are Genting Bhd (cheapest gaming stock in the region, multi-prong re-rating from Genting Singapore, Genting Malaysia, Genting Plantations Bhd and disposal of non-core assets) and BToto (resilient cash flows, attractive yields). We also like MPHB (cheaper exposure to numbers forecast operators, capital management opportunities from disposal of non-core assets). — HwangDBS Vickers Research, Jan 5
Singapore is expected to surpass Las Vegas as the world’s second largest gaming market with US$7 billion (RM22 billion) gross gambling revenue (GGR) in 2012 (2011E: US$6 billion). Marina Bay Sands (MBS) is leading now, but Resorts World Singapore should catch up as it ramps up slot operations (+33% to 2,470 machines, comparable to MBS), and gradually opens the Western Zone (targeting higher-end VIPs).
Genting Singapore could be an early beneficiary of junkets (if licences are approved) given Genting Group’s long relationship with Asean junkets. Malaysia GGR should remain resilient driven by locals (70% of visitors are day trippers) as Singapore novelty factor recedes.
Genting Malaysia Bhd will have a new growth engine in Resorts World New York (16% of 2012F earnings), but Miami remains a long-shot for now (complicated legislature amendments, competing bids from global casino operators).
Rising credit risk amid heightened economic uncertainties could see higher receivables provision/impairment and deleveraging. Singapore is more vulnerable as the VIP segment constitutes 50% of GGR (purely direct VIPs), while Malaysia’s exposure is only 35% (via junkets).
Singapore Integrated Resorts may also be affected by slower discretionary spending given higher reliance on tourist arrivals (two-thirds of visitors are foreigners).
Sales have proven to be resilient irrespective of economic cycles, being a small-ticket item. We estimate 2012F revenue growth at 5% (1x GDP growth) driven by rising 4D Jackpot sales, which should also lower average prize payout.
Berjaya Sports Toto Bhd’s (BToto) revenue market share will likely inch up to 42% (Multi-Purpose Holdings Bhd: 34%) as its 4D Jackpot game launched in June 11 gains ground (advantage of more outlets, including in Sabah).
Our top picks for Malaysia are Genting Bhd (cheapest gaming stock in the region, multi-prong re-rating from Genting Singapore, Genting Malaysia, Genting Plantations Bhd and disposal of non-core assets) and BToto (resilient cash flows, attractive yields). We also like MPHB (cheaper exposure to numbers forecast operators, capital management opportunities from disposal of non-core assets). — HwangDBS Vickers Research, Jan 5
