The Singapore Casino Regulatory Authority (CSA), which showed abhorrence for junkets when the two casinos on the island started, has tempered their stand a wee bit.
They have now licensed two casino junkets, namely, Yu Kiung and Low Chong Aun, to help attract more big gamblers to Genting Singapore (GenS). This set bells ringing and a frenzy of buying on the counter this morning pushed the counter up by 5.8% to RM1.73, after hitting a high of RM1.77.
CRA described the two operators as international market agents who “will on bringing in foreign high rollers to our casinos.”
“We see this positively as the other junket operators will know more about the Singapore government is looking out for, so the process might get easier, “said Carey Wong, an analyst at OCBC Investment Research.
“Another positive thing is the credit risk. Now Genting doesn’t have to extend much credit to the high rollers because the junket operators typically offer own credit.
”Junket operators organise visits to casinos and provide credit to players return for commissions from casino owners.
Wong maintained a buy rating and S$2.02 share price target on GenS.
Nearly 218 million shares were traded today, more than three times the average full-day volume traded over the past 30 days.
The two casinos in Singapore — GenS’s Resorts World Sentosa and Las Vegas Sands’ Marina Bay Sands — are a significant source of tax revenue for the government and a draw for tourists from the region.
The Southeast Asian nation hopes to attract up to 10 per cent more visitors this year, helped by an increase in cruise tourism, Minister for Trade and Industry S Iswaran said today.
Wong estimated Singapore’s gaming market last year was around S$5.7 billion (RM13.9 billion) and expected this to grow to S$6.7 billion this year due to more gaming tables and slot machines, a boost from the junkets and higher tourist arrivals.
However, Wong said Singapore is unlikely to outpace Macau because of the large number of casinos there and its location on China’s doorstep.
DMG & Partners Securities Pte Ltd, a naysayer, said while the news about the junkets should help drive gambling volumes and lower GenS’s credit risk, the small number of approvals and tighter regulatory restrictions may mute the benefits initially.
There may also be some duplication in the client base between the two junket operators and that of GenS’s existing VIP customer base, it said.
GenS’s Resorts World Sentosa made S$398.8 million in adjusted earnings before interest, tax, depreciation and amortization.
EBITDA in the fourth quarter, up from S$384.7 million a year earlier. But its EBITDA was lower than the S$426.9 million reported by Marina Bay Sands for the three months ended in December.
Reuters said, “Out of 25 analysts covering Genting Singapore stock, 14 have “buy” or “strong buy” ratings, nine have “hold” and two have “sell” “strong sell”.
So, do you think there is more upside for this crown jewel of Genting Bhd?
