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Bad debt write-downs impact Genting Singapore’s 15Q3 results

Genting Singapore reported weaker-than-anticipated results in 15Q3 as it lost market share to rival Marina Bay Sands. GGR was S$659 million ($464.7 million), representing a year-on-year decline of 19 percent, although an improvement of 2 percent quarter-on-quarter.

VIP GGR declined by 29 percent YoY to S$252 million, principally due to low hold in 15Q2.

According to Bernstein analysts, VIP remains challenging for the company as it reconfigures its VIP business model and continues to reduce extension of credit to VIP players. VIP rolling chip volume dropped 50 percent YoY (-20 percent QoQ) partly on continued reduction of credit extensions and Marina Bay Sands' more aggressive approach to VIP.

Mass and Premium Mass both showed sequential stability, despite negative currency exchange rates impacting Malaysia and Indonesia, with table and slot GGR at S$407 million, representing a decline of 11 percent YoY. EBITDA declined 17 percent YOY to S$209 million ($147 million), up 8 percent compared with the previous quarter, missing analyst estimates of S$248 million.

As the company continued to write-down legacy VIP credit, its bad debt expense rose to S$92 million, versus S$57 million in 15Q2. Management stated that it may take another two quarters of high levels of bad debt expense to fully write down the old credit provided to VIP patrons over the past 18 months.

In 15Q3, Genting Singapore underperformed against Marina Bay Sands, leading its GGR market share to drop to around 40 percent, a new low. On a more positive note, the company's balance sheet remains strongly capitalized with cash balance at S$4.7 billion, now close to 47 percent of its current market cap.

Bernstein analysts report that Genting has ample liquidity to support the ongoing share repurchases and a potentially higher dividend, warranting a valuation re-rating.

Asia Gaming Brief is a news and intelligence service providing up to date market information for worldwide executives on relevant gaming issues in Asia.

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