A weekend at the two IRs

We spent the weekend at the two integrated resorts (IR), visiting both Resorts World

Singapore (RWS) and Marina Bay Sands (MBS) on six different occasions. All in, we

saw considerably more action at both casinos vis-à-vis our previous weekday visit.

More importantly, RWS’s casino appears to be holding up well despite losing its

monopoly. While we are disappointed at RWS’s still-low table count and its limited

ability to operate more tables especially during peak hours, this is partly compensated

by the strong betting patterns. Meanwhile, observations at MBS’s mass gaming area

revealed that i) it is operating up to 400 tables during peak hours, ii) betting patterns

are moderate to strong, iii) the crowd seemed less intense than at RWS but this is

because of its bigger space, and iv) mixwise, we saw more non-Asian patrons at MBS

than at RWS. It is still too early to make any conclusive remarks now, though initial

observations suggest that MBS’s entry is enlarging Singapore’s gaming pie rather

than cannibalising RWS’s share. We keep our FY10-12 core earnings estimates and

end-CY10 SOP-based target price of S$1.23 for Genting Singapore. We reiterate our

OUTPERFORM call.

Observations and comments

It has been almost two weeks since Singapore’s second IR opened its doors to the

public. Over the weekend, we spent some time at the mass gaming floor of RWS and

MBS. We were at both establishments during the peak hours of Friday and Saturday

night. We also visited both properties on Saturday afternoon. Below are key

observations and comments from our visit:

•

visits but we saw a short line building up on the foreigners’ entry lane at RWS during

our Saturday afternoon visit (Figure 1a). We suspect this was probably a tour group.

For MBS, the absence of long queues was expected given its four entry/exit points.

This time around, MBS appeared to have implemented three different passport

check-points for foreigners (Figure 1b). This could have created the illusion of a

slight queue as we waited in line for our passports to be scanned during two of our

visits.Queues – There were hardly any long queues at the casino entrances during our

• Crowd intensity – All in, we were at the two casinos on six different occasions over

•

MBS on Friday night. This is at the lower end of the 350-400 tables estimated during

its debut. Meanwhile, this figure is also lower than the figure of 442 mass gaming

tables highlighted by management during Las Vegas Sands’s earnings call last

week. On Saturday night, however, there were visibly more operating tables. Even

at midnight, we saw employees opening up new tables. A rough table count

revealed close to 400 tables operating on Saturday night. Over at RWS, our rough

count estimated that the number of mass gaming tables remained low at about 150-

200. This excludes the electronic table gaming machines, which collectively offer

some 100-150 terminals for Baccarat and Roulette. We are slightly disappointed at

the still-low table count and RWS’s limited ability to operate more tables especially

during peak hours. Although we acknowledge that new properties need time to ramp

up, RWS’s current mass table count was relatively unchanged from our mid-Mar

update. While we had earlier attributed the modest table count to management’s

yield emphasis strategy, we now believe that the more likely explanation could be

staff-related. For FY10, our table count estimate stands at 500, lower than

consensus and management’s earlier guidance of 700-800 tables. Hence, we are

sticking to our earnings forecasts.Table count – We estimated that about 350 mass gaming tables were operating at

•

betting patterns were strong with most wagers being much higher than the minimum

bets. This was especially so at RWS. We saw more S$25 minimum bet tables at

MBS than at RWS. There were even a handful of S$200 minimum bet Baccarat

tables at RWS and these were decently occupied even during our afternoon visit. In

a way, RWS’s slower-than-expected table count is partly compensated by the

stronger-than-expected betting patterns observed so far.Betting patterns – Based on our casual observations, it would seem that mass

[ 3 ]

Valuation and recommendation

Still early but encouraging observations so far.

IRs have been encouraging. We saw considerably more action at both casinos vis-àvis

our previous weekday visit. More importantly, contrary to earlier expectations,

RWS’s casino operations appear to be holding up well despite the shift from its

previous monopoly status. While we are disappointed at RWS’s still-low table count

and its limited ability to operate more tables especially during peak hours, this is partly

compensated by its stronger-than-expected betting patterns. Meanwhile, observations

at MBS’s mass gaming area revealed that i) it is operating up to 400 tables during

peak hours, ii) betting patterns are relatively strong, iii) the gaming crowd seemed less

intense than at RWS but this is because of MBS’s bigger space, and iv) mixwise, we

saw more non-Asian patrons at MBS than at RWS.Our weekend observations at both

MBS to expand pie rather than cannibalise?

make any conclusive remarks following MBS’s debut, though initial observations

suggest that MBS’s entry is helping to enlarge Singapore’s gaming pie rather than

cannibalise RWS’s share. We believe that both properties have different propositions

and would reach out to different market segments.We believe that it is still too early to

Reiterate OUTPERFORM.

and end-CY10 SOP-based target price of S$1.23 for Genting Singapore. Potential key

re-rating catalysts include i) quicker-than-expected ramp up, ii) confirmation of solid

gaming data points in its 1QFY10 results announcement this Thursday, and iii) lessthan-

expected shifts of punting interests to MBS. We reiterate our OUTPERFORM

call.We are retaining our FY10-12 core earnings estimates

the weekend. For both casinos, the crowd was probably most intense on Saturday

night. This was not surprising. On the surface, the punting crowd at MBS seemed

less intense compared with its competitor but this was probably because of MBS’s

more spacious casino layout where the crowds were better spread across the two

levels of mass gaming area. The higher number of operating tables could have also

helped reduce MBS’s crowd concentration. At RWS, we hardly saw any empty seats

at the operating gaming tables, especially on Saturday night. For some tables,

punters were standing at up to three layers. Trying to locate an empty terminal at

the slot machine section also proved challenging. Overall, we suspect the number of

mass gamers was probably slightly higher at MBS. In comparison to our previous

weekday visit, there were considerably more punting activities at both casinos.

Contrary to earlier expectations, RWS appears to be holding up well despite the

shift from its previous monopoly status. Mixwise, we saw more non-Asian patrons at

MBS than at RWS. Although we acknowledge the different Asian/non-Asian mix,

both casinos are still largely Asian-centric.