Genting Singapore falls a fourth day amid concern over visitors

February 19, 2010
Singapore Democrats

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Jonathan Burgos
Bloomberg

Genting Singapore Plc, owner of Singapore’s first casino, fell for a fourth day amid concern the venture may draw fewer visitors than forecast.

The stock lost 1.1 percent to 94 Singapore cents as of 2:05 p.m. local time, down 11 percent since Resorts World Sentosa, a gambling and entertainment facility, opened on Feb. 14. Genting has slumped 28 percent this year, the worst performance on the benchmark Straits Times Index, which has retreated 5.6 percent.

Genting ended 2009 at a record-high of S$1.30 as investors anticipated a boost in revenue from starting up the island- state’s first so-called integrated resort. The S$6.6 billion ($4.7 billion) venture had 60,000 patrons in the first three days, Robin Goh, a Resorts World spokesman, said in an e-mailed statement today.

“Expectations are in our view unrealistically bullish for a virgin casino market,” said Dominic Noel-Johnson, a Hong Kong-based analyst at Citigroup Inc. “While a few days don’t constitute a trend, initial visitors to the Singapore casino are significantly below our estimates.

”The facility needs 34,000 visitors each spending at least $100 a day to meet Noel-Johnson’s “below consensus estimates,” he said. Citigroup rates Genting Singapore “sell.”

Analysts at BNP Paribas and CLSA Asia Pacific Markets said they will keep their “buy” ratings on Genting Singapore stock because the outlook will change as the company completes remaining phases of the venture on the island linked to Singapore by bridge.

‘Remain confident’

Goh said “we remain confident” Resorts World will attract 13 million visitors in the first year of operations for the entire resort, reiterating the target announced by Chief Executive Officer Tan Hee Teck on Feb. 14.

Genting’s only domestic rival, Las Vegas Sands Corp.’s Marina Bay Sands resort, is set to open in late April. Las Vegas Sands this week said its biggest resort, Venetian Macao in the Chinese territory of Macau, almost doubled operating income in the fourth quarter as betting on table games and slot machines climbed. The venture benefited from record betting in the only part of China where casinos are legal.

Visitor numbers at Resorts World aren’t comparable as Macau’s casinos are bigger, Goh said.

“We estimate between 11 million and 12 million people will visit the casino resort this year,” at Sentosa, said Michael Greenall, Kuala Lumpur-based analyst at BNP Paribas. “That looks achievable. More people will visit the resort once the Universal Studios theme park opens.”

Early March

The theme park is expected to open in early March, Resorts World said on Feb. 11. When complete, the resort will include 530 trade tables, 1,300 slot machines, and a 12-table poker pit in the casino, the adjoining Universal Studios theme park and six hotels. Four of the hotels opened last month and two more are scheduled to open after 2010, according to the company’s Web site.

The casino has had a “good start” gauging from the $28.5 million gaming revenue that Asian Gaming Intelligence estimates Resorts World garnered in the first 36 hours of operations, Aaron Fischer, an analyst at CLSA Asia Pacific in Hong Kong, said in an e-mailed note. “Overall, it’s been strong, but we do not have enough data to determine the long-term success or failure of the casino.”

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