Marina Bay Sands' rolling chip volume hit 8-year low in Q2

This pulled down VIP gaming revenue by as much as 58%.

Marina Bay Sands’ (MBS) core EBITDA crashed by 25.2% to US$368m with a margin of 52.2%, significantly lower than 59% last year, Las Vegas Sands’ Q2 results revealed. On a constant currency basis, it fell even further by 28.3% due to lower rolling volume and win percentage for the VIP segment.

According to a UOB Kay Hian report, mass-to-VIP gross gaming revenue (GGR) mix for tables (i.e. excluding slots) was at 62%:38% in Q2. Rolling chip volume (RCV) also continued its downtrend and plummeted by 35% YoY to $7.8b in Q2, marking an eight-year low. The lower RCV coupled with a lower win rate resulted in VIP GGR dropping 58% YoY and 52% QoQ.

Mass market non-rolling volume increased 1% YoY with GGR up 3% in 2Q2018 on better win rate, UOBKH said. “Positively, the slot segment continued to performing well, recorded 4% YoY growth in slot handle. MBS’ slot handle has been on a YoY growing trend since 3Q2013 (with the exception of 3Q2016),” it added.

All in all, mass market (tables and slots) GGR rose about 3% in 2Q18.

Meanwhile, Resorts World Sentosa’s (RWS) VIP RCV growth is expected to outperform MBS’. To recap, RWS recorded positive quarterly growth in VIP RCV in 3Q2017-1Q2018 (after 12 consecutive quarters of YoY declines), in contrast with MBS’ RCV decline of 8-35% over the same period, thanks to RWS’ more relaxed credit policy.

RWS’ VIP volume should at least sustain in the near term, UOBKH noted. RWS’ RCV market share steadily increased from 2Q2017’s 34% to 1Q2018’s 49%. “Meanwhile, for the mass market, we expect RWS to achieve a similar performance as MBS, i.e. low single-digit growth in GGR,” it added.

“Despite expecting only a flat or low single-digit growth in industry GGR, Japan’s legalisation integrated resorts (IR) has put the two Singapore casino operators as strong candidates in the IR bidding, given their experience in operating in a highly-regulated casino environment and track record in contributing to the country’s tourism,” UOB Kay Hian analyst Vincent Khoo said.

“We expect valuations to trend up over time, supported by stable Singapore operations and as its bidding for Japan’s IR concession builds up to the RFP stage (expected in 2019),” he added.