Genting Singapore 16Q1 profit down 83 percent

Casino operator Genting Singapore saw 16Q1 net profit down 83 percent year on year to S$10.8 million (US$7.9 million), due to higher foreign exchange loss, higher bad debt provisions, finance and other costs.

According to a filing to the Singapore Stock Exchange, the net profit for the first quarter of 2016 is compared to S$62.7 million reported during the same period in 2015.

Results were below analyst expectations, due to “owing to greater-than-expected bad debt provisions”, said Union Gaming.

The group reported revenue of S$608 million and adjusted EBITDA of S$192.5 million.

Gaming revenue was down 9 per cent to S$450.5 million.

“We  continue  to  exercise  caution  with  our  VIP  gaming  business.  In  this  connection,  we  have  been prudent in providing for our gaming receivables,” said the operator.

“Provisions may stay elevated for the rest of the year as the company works on collecting debt from its customers,” added Morgan Stanley in a note over the weekend.

However, the casino operator also said their mass gaming market segment was off to a good start.

“Our mass gaming market segment started 2016 on a better note with strong electronic gaming machines’ performance. We have seen encouraging progress with the implementation of our new marketing strategies to grow the foreign premium mass market,” said Genting.

Resorts World Sentosa contributed revenue of S$607.7 million and adjusted EBITDA of $201.2 million, which was attributed to growth in VIP and premium mass.

In relation to the Jeju casino project, which is expected for a soft opening in 17Q4, Union Gaming said the company is unlikely to receive any valuation credit for now, given the net project cost is still in question, the regulatory environment has not been finalized, and generally weak Korean gaming trends.