A trio of brokerages has reportedly expressed unease over a recent revelation from Asian casino operator, Genting Singapore Limited, that its second-quarter net profit had dropped by some 5.2% year-on-year to approximately $122.3 million.
According to a report, the Singapore-listed firm detailed that its adjusted quarterly earnings before interest, taxation, depreciation and amortization would have declined by 20% year-on-year on a hold-normalized basis but that it had been saved by a 13.6% increase in aggregated net revenues largely as a result of a high 3.7% hold rate from its VIP gaming operations.
However, Sanford C Bernstein Limited reportedly used a Friday note to declare that it remained ‘concerned’ about Genting Singapore’s current level of bad debt expenses despite reassurances from the operator’s board that it was now exercising a more prudent credit extension policy. The brokerage pointed in particular to the just over $34.2 million the operator behind Singapore’s giant Resorts World Sentosa complex held in trade receivables debt, which is considerable more than the $346,458 recorded for the same three-month period in 2018.
According to a statement from Sanford C Bernstein…
“Bad debt expense as a percentage of accounts receivable is also a staggering 31%. Despite high VIP hold of 3.7% versus historical average hold rate for Singapore VIP gaming of 2.85%, poor mass performance and high bad debt expenses dragged earnings before interest tax, depreciation and amortization numbers.”
For its part, Japanese financial services firm brokerage Nomura Holdings Incorporated used its own Friday advice to describe the high second-quarter impairment charge from Genting Singapore, which is a subsidiary of Asian casino behemoth Genting Malaysia Berhad, as a ‘negative surprise’ and ‘unexpected.’ The Tokyo-headquartered brokerage purportedly moreover stated that it was pruning its prediction for the casino operator’s adjusted earnings before interest, tax, depreciation and amortization for the next two full years by 2% and 4% respectively in order to ‘build in the decline in mass volumes and also pencil in a higher accelerated depreciation charge to factor in an earlier end to the useful life of some assets.’
Nomura’s note reportedly read…
“But [Genting Singapore Limited’s] management attributed it to their prudent stance in providing for future losses given the escalation in macro uncertainty. We believe this will not be annualized for the rest of 2019.”
Finally, GGRAsia reported that Malaysian brokerage Maybank Investment Bank Berhad used a Sunday communication to proclaim that Genting Singapore Limited’s fundamentals ‘continue to weaken’ in advance of noting that its second-quarter impairment charge had been ‘the highest since the third quarter 2016.’
Reportedly read Maybank Investment Bank Berhad’s note…
“More crucially, the high margin second-quarter 2019 mass-market gross gaming revenue fell [circa] 3% year-on-year and [circa] 10% quarter-on-quarter due to the Singaporean citizens and permanent residents casino entry levy hike of 50% that came into effect on April 4.”