Squeezing out profit from flat revenue

In the words of Las Vegas Sands Chief Operating Officer Rob Goldstein, “Singapore is a wonderful success story, but at this point it's just a very large producer of EBITDA without growth prospects in the near future.”

Goldstein was speaking to analysts after a record year for the company’s Marina Bay Sands property that saw adjusted property EBITDA up 24.6 percent to $456 million in Q4. The margin was a robust 52.5 percent, compared with just 34.6 percent for the company’s Macau properties.

Although management did a sterling job in controlling costs and squeezing the maximum profit out of the iconic resort, it showed little, to no, top line growth.  

Non rolling win was flat, edging up just 1.1 percent. Slots revenue showed strong gains, up 9 percent, but rolling chip volume was down 4 percent to $9.93 billion. VIP accounted for 17 percent of profit, compared with 8 percent the prior year.

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Judges in Singapore will now have sentencing guidelines for dealing with casino fraud after a new framework was set out by Chief Justice Sundaresh Menon. Menon noted an absence of guidelines during a case involving a member of a Russian syndicate that used sophisticated technology to predict the outcomes of slot machines. In his sentencing guidelines, the CJ set out a matrix of nine sentencing ranges, based on the level of harm caused by the offense (slight, moderate and severe) and whether the offender’s culpability was low, medium or high. This led to a range from a fine for slight harm and low culpability, up to seven years for severe harm and high culpability.

No immediate plans for bitcoin ban


Singapore says it sees no reason why it should ban trading in bitcoin. “The number and different forms of cryptocurrencies is growing internationally”, Deputy Prime Minister of Singapore Tharman Shanmugaratnam told deputies. “Cryptocurrencies are an experiment. It is too early to say if they will succeed”, he said answering questions from lawmakers about the possibility to ban the trading of bitcoin and its alternatives. The Monetary Authority of Singapore has been closely studying developments and potential risks. “As of now, there is no strong case to ban cryptocurrency trading here”, he said.

The lack of growth on the revenue side comes despite a strong recovery across Asia’s major markets last year, led by the VIP sector. Singapore itself saw record arrivals in 2017, with visitor numbers up 6.2 percent to 17.4 million, fuelled by an increasing number of tourists from the key China market.

Tourism receipts rose 3.9 percent to S$26.8 billion ($20.20 billion) in 2017, also a record high.

However, that spending is not finding its way onto the casino floors, leaving executives struggling to answer perplexed analysts’ questions.

Goldstein told analysts that in part, the lacklustre performance was due to the relatively small size of the VIP sector in Singapore compared with Macau. He also conceded the mass market had been relatively disappointing.

“I don't know why, I would say otherwise until the future, I don't see why there would be any catalyst in the near future to drive that.”

Chief Financial Officer Patrick Dumont agreed that the relatively small size of the VIP sector had been a factor, but also spoke about increasing competition from other Asian markets, such as the Philippines and the continuing draw of Macau for visitors from Korea and Japan. Although much of the focus has been on the VIP market, he said he was concerned about the flat trajectory of the mass market.

“We're going to keep at it, we've got a very good team on the ground there, we'll keep looking at cost but obviously we'll love to see some top flying growth and that's the best indications, or best thoughts I can give you on the growth prospects for Singapore.”

The company’s retail operations continue to perform strongly, although executives said there was no news to report as to whether it would spin off its Singapore mall.

Analysts at Maybank are expecting the higher visitor numbers in Singapore to translate into more spending at least in the VIP sector this year, as does ratings agency Fitch. While, according to a recent Bloomberg report, China’s high-net-worth individuals are increasingly choosing Singapore over Hong Kong as a destination to park their money.

These individuals control an estimated $5.8 trillion the report said, citing consulting firm Capgemini SE. Part of the preference for Singapore is because it’s at a safer distance from scrutiny from authorities in Beijing than in Hong Kong.