Genting Singapore is in analysts’ and investors’ bad books after its shares slipped 11 percent in just a month following its release of sluggish second quarter results in August.
The company which operates the Resorts Sentosa complex in Singapore is facing stiffer competition from offshore casinos and may lose market share in the VIP sector, as well as losing margins due to high debts. Analysts quoted by local media in Singapore are generally bearish about the company.
JPMorgan said in the report that Genting had S$81.6 million ($64.4 million) in bad debt as an expense, which had caused its net profit to fall 27 percent to S$102.3 million ($80.7 million). This had been caused by “Genting’s push for volume growth in Singapore’s mature gaming market, by trying to attract more overseas high-rollers through offering more credit to these premium gamblers” the report said.
Macquarie Research said that Genting’s extension of credit to VIP players has shaved off 7 to 8 per cent off Ebitda and its returns on equity have halved in three years. Macquarie has downgraded Genting Singapore to “underperform”, saying investors’ hopes of a recovery were headed for a disappointment.