Genting Singapore Falls Amid Concern Over Visitors (Update1)
February 19, 2010, 04:29 AM EST
Feb. 19 (Bloomberg) — Genting Singapore Plc, owner of Singapore’s first casino, fell for a fourth day amid concern the venture may draw fewer visitors than forecast.
The stock lost 1.1 percent to 94 Singapore cents at the close, down 11 percent since Resorts World Sentosa opened its gambling facility on Feb. 14. Genting Singapore has slumped 28 percent this year, the worst performance on the benchmark Straits Times Index, which has retreated 4.9 percent.
Genting Singapore ended 2009 at a record-high of S$1.30 as investors anticipated a boost in revenue from starting up the island-state’s first so-called integrated resort. The casino at the S$6.6 billion ($4.7 billion) venture had 60,000 patrons in the first three days, Robin Goh, a Resorts World spokesman, said in an e-mailed statement today.
“Expectations are in our view unrealistically bullish for a virgin casino market,” said Dominic Noel-Johnson, a Hong Kong-based analyst at Citigroup Inc. “While a few days don’t constitute a trend, initial visitors to the Singapore casino are significantly below our estimates.”
The facility needs 34,000 visitors each spending at least $100 a day to meet Noel-Johnson’s “below consensus estimates,” he said. Citigroup rates Genting Singapore “sell.”
Analysts at BNP Paribas and CLSA Asia Pacific Markets said they will keep their “buy” ratings on Genting Singapore stock because the outlook will change as the company completes remaining phases of the venture on the island linked to Singapore by bridge.
‘Remain Confident’
Goh said “we remain confident” Resorts World will attract 13 million visitors in the first year of operations for the entire resort, reiterating the target announced by Chief Executive Officer Tan Hee Teck on Feb. 14.
Genting’s only domestic rival, Las Vegas Sands Corp.’s Marina Bay Sands resort, is set to open in late April. Las Vegas Sands this week said its biggest resort, Venetian Macao in the Chinese territory of Macau, almost doubled operating income in the fourth quarter as betting on table games and slot machines surged. The venture benefited from record betting in the only part of China where casinos are legal.
Visitor numbers at Resorts World aren’t comparable as Macau’s casinos are bigger, Goh said.
“We estimate between 11 million and 12 million people will visit the casino resort this year” at Sentosa, said Michael Greenall, Kuala Lumpur-based analyst at BNP Paribas. “That looks achievable. More people will visit the resort once the Universal Studios theme park opens.”
Early March
The theme park is expected to open in early March, Resorts World said on Feb. 11. When complete, the resort will include 530 trade tables, 1,300 slot machines, and a 12-table poker pit in the casino, the adjoining Universal Studios theme park and six hotels. Four of the hotels opened last month and two more are scheduled to open after 2010, according to the company’s Web site.
The casino has had a “good start” gauging from the $28.5 million gaming revenue that Asian Gaming Intelligence estimates Resorts World garnered in the first 36 hours of operations, Aaron Fischer, an analyst at CLSA Asia Pacific in Hong Kong, said in an e-mailed note. “Overall, it’s been strong, but we do not have enough data to determine the long-term success or failure of the casino.”
–Editor: Reinie Booysen, Richard Frost
To contact the reporter on this story: Jonathan Burgos in Singapore at +65-6212-1156 or jburgos4@bloomberg.net
To contact the editor responsible for this story: Darren Boey at +852-2977-6646 or dboey@bloomberg.net
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Isn’t the drop something that is expected. Simple maths will show that the forecast of 13,000 visitors in 2010 is a “full stretch of management’s imagination’. Here is why. Total visitors to Singapore for the full year of 2009 was 9.73 Million, a drop of 4.3% from the previous year. Now, is it possible for tourist arrivals in 2010 to increase by 50%? Far-fetch, right. Assuming the same number of tourists visit Singapore in 2010 as in 2009, there is still a gap/slack of about 4 million in RWS’s forecast of 13M. Is it reasonable to expect local Singaporean and Permanent Residents to fill up the slack/gap? Here is the interesting point. The population of Singapore is slightly over 3 Million. Is there any logic to assume that local Singaporean/permanent can fill up the gap? To do so would require each Singaporean to at least visit Resorts World Sentosa 1.4x in 2010! Given the slow global economic recovery, the restrictions imposed on Singaporean into the casino and the impossibility of tourist arrivals into Singapore increasing by 50% over that of 2009, isn’t it fair then to say the forecast of management is truly a “full stretch of their imagination”.
A friend, playing devil’s advocate, placed a call all the way to Manila to ask me if perhaps the novelty of the Universal Studio theme parks can drive the 13 Million visitors to Resorts World Sentosa. I told him I actually wish that it will (given the huge investment in the project and the economic benefits it will generate) but unfortunately it is difficult to go against case histories of novelty theme parks in Asia and elsewhere. I shared with him the case of Tokyo Disney Resort in Chiba, Japan and Hong Kong Disney Resort in Lantau Island, both of which had failed to generate the traffic as expected. It took Tokyo Disney Resort some 24 years since it opened in 1983 to host 13.9 Million visitors in 2007. Hong Kong Disney Resorts on the hand failed in the first three years to attract its targeted 5.6 Million annual visitors. I further emphasized that both projects at the time they were launched coincided with great prosperity (Japan in 1983 and Hong Kong in 2005). I concluded that given the present weak global recovery, I just don’t see how RWS’s 2010 estimates of 13 Million visitors can materialized this year or in the near future.
I am shocked that my comments invoke such an angry and uncouth
response from Tan Tua Lan. I find it odd that instead of offering an objective and substantive argument to dispute my analysis, he has chosen to attack my person and hiding under a pseudonym.
I think Tua Lan’s comment deserves no space here. Dude, you may be angry with the world for whatever reasons or have unresolved conflicts to work out. But please don’t vent your anger in a website that is dedicated to helping those in transition in a positive way. And if you are one of those in transition like me, seek help bro and talk to a counselor and channel your energy in a positive way.
I wish you well Bro! The key to surviving a redundancy is a positive mental health.
I hope that Tan Hee Lan, the CEO of Genting Singapore Sand is more sensitive and will give priority to citizens of this host country the priority of jobs over other nationalities in the IR.
Hello Mr. Tan Hee Lan, CEO of Genting Singapore! John Lim’s statement make a lot of sense.Please employ more Singaporeans. I also encourage Singaporeans to support the Employ Singaporeans First campaign.Many of our own people are jobless now due to the recent high intake of foreigner workers. You are encourage to join this cause at http://www.PetitionOnline.com/Employed/petition.html
Tan Hee Lan, the CEO of Genting Singapore certainly don’t know how to be a good guest in this country. I read somewhere that he promised the Philippine President to employ 5,000 Filipinos in this IR. May be we should also do a petition to get this CEO out of Singapore. Can you imagine a CEO who is insensitive to the interests of this country in terms of helping create jobs for local. It seems he take his “host” for granted. What an ingrate!
My comment on March 1 should read as “I am shocked that my comments evoke such an angry and uncouth
response from Tan Tua Lan”. Sorry for the typo error.
Isn’t the drop something that is expected. Simple maths will show that the forecast of 13,000 visitors in 2010 is a “full stretch of management’s imagination’. Here is why. Total visitors to Singapore for the full year of 2009 was 9.73 Million, a drop of 4.3% from the previous year. Now, is it possible for tourist arrivals in 2010 to increase by 50%? Far-fetch, right. Assuming the same number of tourists visit Singapore in 2010 as in 2009, there is still a gap/slack of about 4 million in RWS’s forecast of 13M. Is it reasonable to expect local Singaporean and Permanent Residents to fill up the slack/gap? Here is the interesting point. The population of Singapore is slightly over 3 Million. Is there any logic to assume that local Singaporean/permanent can fill up the gap? To do so would require each Singaporean to at least visit Resorts World Sentosa 1.4x in 2010! Given the slow global economic recovery, the restrictions imposed on Singaporean into the casino and the impossibility of tourist arrivals into Singapore increasing by 50% over that of 2009, isn’t it fair then to say the forecast of management is truly a “full stretch of their imagination”.