RWS has yet to reach full potential: CIMB

That is until it has sufficient accommodation, more complete product offerings and a boost from the company’s marketing efforts.

CIMB said:

Marketing programmes for RWS will likely be more restrained until its accommodation constraints are relieved and the West Zone is completed, which we expect in 2H. The marketing team will then have more complete products to market.

As such, we believe RWS has yet to reach its full potential, with sufficient accommodation, more complete product offerings and a boost from the company’s marketing efforts.

It is arguably difficult to quantify the boost to gaming demand and earnings from these new non-gaming amenities. But even more comprehensive integrated resort offerings should help draw in more visitors, which in turn could translate into higher casino patronage and gaming revenue.

We gather that Genting Singapore has been relatively unaffected by the extension of the scope of Casino Control (Advertising) regulations on promotions. Even before the extension, all promotions had to be vetted by the authorities. With the recent measures, there are in fact more certainties on the ‘dos and don’ts’ of promotions.

Genting Singapore will be releasing its 4Q11 results on 22 Feb. Non-gaming revenue should be boosted by the launch of new attractions and year-end holiday season.

On the flip side, gaming revenue, particularly in the VIP segment, might still be impeded by a lack of accommodation given delays in the opening of Equarius Hotel and the beach villas and Genting Singapore’s still-cautious lending policy. As such, we flag the risk of a results shortfall. Our current FY11 EBITDA projection of S$1,750m implies a 4Q EBITDA of S$498m.