RWS Q1 EBITDA Likely Up 25% Quarterly

Singapore casino complex Resorts World Sentosa Inc RWS is expected to see sequential improvements in quarterly earnings before interest, taxation, depreciation and amortization (EBITDA) deductions in the three months to March 31, Morgan Stanley Asia Ltd said.

The property, promoted by Genting Singapore Ltd, expects to generate S$311 million (W220.7 million) in EBITDA in the first quarter. This represents an increase of about 25% quarter-on-quarter and about 53% year-on-year. These results represent about 89% of pre-pandemic levels in the first quarter of 2019, and "will be 9% higher than the sales-side consensus provided by Visible Alpha," analysts Pravin Chowdhary and Gareth Leung say.

Analysts expected net sales growth in Genting Singapore to slow to around 5% in 2024 from 41% early in the pandemic recovery in 2023.

Morgan Stanley said Genting Singapore's gaming sales had already "recovered to or slightly above 2019 levels in the fourth quarter of 2023," but 2024 gaming volumes "may be limited by 400 fewer hotel rooms after the hard rock closure."

This means Resorts World Sentosa's hotel brand closed on March 2 as it made its planned expansion.

Morgan Stanley suggested that the complex's 2024 gaming growth "could stem from a large segment and improved market share."

A note from the broker said a recent meeting in Singapore invited Genting Singapore executives and investors.

Factors likely to increase quarter-on-quarter EBITDA in the first quarter include "a low base in the fourth quarter of 2023 impacted by a one-off cost of approximately S$40 million," "improving the number of visitors to China" and "a partial recovery of high provisions made in the fourth quarter of 2023" related to bonds.

Singapore visitor numbers recovered to 92.8% in the first three months of the year, pre-pandemic, in the first quarter of 2019, according to the latest data from the Singapore Tourism Authority. Chinese visitor numbers lagged the overall trend at 81.8% in the first quarter of 2019.

In a voluntary filing last week, Genting Singapore did not directly address shareholder questions seeking comment on the recent Chinese embassy in Singapore's warning of Chinese citizens to stay away from gambling and whether this "may negatively impact the performance of the company's operations going forward." 홀짝게임

Genting Singapore shares casino exclusivity in Singapore with Las Vegas Sands Corporation, which operates Marina Bay Sands Resorts.

Morgan Stanley said Genting Singapore's allowance for accounts receivable had risen to S$222 million as of the end of 2023, with impairment costs of S$124 million in 2023.

"After 12 months, impairment of accounts receivable compared to EBITDA increased to 19.6% in the second half of 2023 from 7.8% in the first half of 2023 and 9.0% in 2019," the brokerage observed.