Singapore’s gross gaming revenue could hit US$7b

MBS has overtaken RWS as the market leader with 52% share of GGR.

DBS Vickers Research said:

We expect Singapore’s gross gaming revenue (GGR) to hit an impressive US$6bn in 2011E and US$7bn in 2012F (yet to include potential impact of junkets). While junkets could lead to potential cannibalisation of the direct VIP segment and lower margins due to commissions, these should be mitigated by stronger volume growth and lower receivable provision/ impairment.

Key risks to sector include slower tourist arrivals (>2/3 of visitors are foreigners), higher credit risk (given pure exposure to direct VIPs), and deleveraging.

MBS has overtaken RWS as the market leader with 52% share of GGR. But RWS should start catching up soon on the back of: a) Ramp up in slot operations (+33% to 2470 machines by end-11, comparable with MBS); b) Higher visitor arrivals with world’s first Transformer ride (launched on 3 Dec) and potential spin-off from Genting Plantation’s Johor Premium Outlets; and c) Opening of Western Zone (Maritime Museum launched on 15 Oct; 200-room Equarius Hotel and 20 beach villas by early-12 to attract higher-end VIPs; Marine Life Park & Equarius Water Park by mid-12).

While MBS is closer to the CBD and stands to benefit from completion of the Circle Line and International Cruise Terminal in 1H12, RWS can leverage on its theme parks and Genting Group’s 40-years experience in ASEAN (extensive customer database, good relationships with junkets).