Singapore Gross Gaming Revenue declines 2.4pct 2018: Bernstein


Brokerage Sanford C. Bernstein Ltd expects market-wide gross gaming revenue (GGR) in Singapore to reach SGD$6.20 billion (US$4.53 billion) in full-year 2018, a decline of 2.4 percent in year-on-year terms.

In a note on Friday, the institution said combined 2018 VIP revenue for Marina Bay Sands (pictured), the gaming resort controlled by Las Vegas Sands Corp, and Resorts World Sentosa, controlled by Genting Singapore Plc, would in likelihood reach SGD2.31 billion, compared to SGD2.49 billion in 2017.

The brokerage additionally forecast mass-table-market GGR to reach SGD2.32 billion in full 2018, down 3.8 percent in year-on-year terms. Slot GGR was expected to rise by 8.9 percent in the same period to SGD1.57 billion, analysts Vitaly Umansky, Kelsey Zhu and Eunice Lee wrote.

“Singapore is a stable growth market with significant cash flow generation,” they noted. Following the opening of Marina Bay Sands and Resorts World Sentosa in 2010, the city’s casino duopoly went on to produce annual GGR that eventually peaked at SGD7.63 billion in 2014.

“The anti-corruption campaign in China, however, represented significant headwinds to the market in 2015 and 2016,” Sanford Bernstein’s note stated. That was a reference to a sustained contraction of gross gaming revenue that occurred in the Singapore market in 2015 and 2016, which a number of analysts attributed to China’s anti-corruption campaign.

The brokerage added: “We estimate that over 50 percent of VIP is comprised of Chinese players. Hence, in 2015, the relative softness of the Chinese economy, along with the anti-corruption campaign, exerted influence on the VIP market in Singapore (rolling chip volume down 23 percent year-on-year and VIP GGR down 31 percent year-on-year).”

Sanford Bernstein’s analysts added that Singapore’s casino market recovered “modestly” from that contraction in 2017. “Our current forecast assumes a 2-percent compound annual growth rate for the next five years [2018-2022]. We think Singapore market [annual] GGR will get back to SGD7 billion by 2022.”

Sanford Bernstein’s forecasts about the Singapore market were included in a 46-page report on U.S.-based Las Vegas Sands. Besides controlling Marina Bay Sands in Singapore, the firm is the main shareholder of Macau casino operator Sands China Ltd, and has shown interest in bidding for a casino licence in Japan once the bidding process kicks off.

The brokerage noted in its report that Las Vegas Sands had “great Asia exposure”, with 58 percent of the company’s profits being generated by Sands China, and 32 percent originating from Marina Bay Sands.

“From 2017–2022 (estimate), we forecast Las Vegas Sands’ revenues to grow at approximately 6 percent” compounded annually, Sanford Bernstein said in its note.

It added: “We expect margins to improve, from 39 percent in 2017 to 41 percent in 2022 (estimate) on operating leverage and better business mix. Key drivers include continued long-term expansion of the mass market in Macau (albeit with near term slowdown), continued margin improvement in Singapore and improvement in mid-week average daily [hotel] rates in Las Vegas.”


GGR Asia