Genting Singapore, known for its flagship integrated resort Resorts World Sentosa (RWS), has reported a sharp decline in financial performance for the second quarter of 2024. This downturn, attributed to a significant drop in VIP gambling volumes and the broader impact of China’s crackdown on cross-border gambling, has led to notable reductions in both revenue and profitability.
Revenue and Gross Gaming Revenue
For the three months ending June 30, 2024, Genting Singapore experienced a substantial drop in net revenues. The company reported net revenues of SGD 571 million (USD 434 million), reflecting a 27% decline compared to the previous quarter. Gross Gaming Revenue (GGR) also fell by 29%, coming in at SGD 636 million (USD 483 million).
A critical area of concern was the VIP segment, which saw a dramatic 53% decrease in GGR, down to SGD 230 million (USD 175 million). In contrast, mass market and slot GGR remained stable at SGD 405 million (USD 308 million), indicating that the decline was predominantly within the VIP segment.
Adjusted EBITDA
The company’s Adjusted EBITDA also took a significant hit, falling by 46% to SGD 201 million (USD 153 million). This figure was notably below analyst consensus estimates, underscoring the severity of the financial strain experienced by Genting Singapore.
Impact of VIP Volume Decline
Analysts, including those from JP Morgan, have attributed the steep decline in Genting Singapore’s VIP revenue to several factors. A primary reason highlighted is the high comparison base from Q1 2024 and a drastic drop in VIP luck. VIP luck, which refers to the percentage of revenue won from VIP players, decreased from 4.6% a year ago to 2.9%, falling short of the theoretical 3.3% mark.
JP Morgan noted that VIP rolling volumes plummeted by 26% quarter-on-quarter, reaching the lowest levels since the full reopening of the casino sector. This decline aligns with the performance trends observed at Marina Bay Sands, Genting Singapore’s local rival.
Influence of China’s Crackdown
The analysts pointed out that the substantial drop in VIP volumes could be linked to China’s intensified scrutiny on cross-border gambling. This increased regulatory pressure and deteriorating high-end consumer sentiment have likely impacted VIP gaming activities, contributing to the overall downturn in Genting Singapore’s performance.
Group-Wide Revenue Growth
Despite the challenges faced in Q2 2024, Genting Singapore reported a strong performance for the first half of the year. Group-wide revenues surged by 25% compared to the same period in 2023, reaching SGD 1.36 billion (USD 1.03 billion). Adjusted EBITDA also saw a significant increase of 26%, amounting to SGD 570.8 million (USD 433 million). This indicates that the company has maintained overall growth momentum, even amid recent setbacks.
RWS2.0 Expansion Plan
Genting Singapore remains committed to its expansion strategy with the ongoing RWS2.0 development. The first phase of this plan, which includes Illumination’s Minion Land and the Singapore Oceanarium, is on track for a soft opening in early 2025. Additionally, the development of the Central Lifestyle Connector and the all-suite hotel replacing the Hard Rock Hotel is progressing as scheduled.
Looking further ahead, the Waterfront development, which will feature two new luxury hotels, is expected to commence construction in the fourth quarter of this year. These projects are anticipated to enhance RWS’s offerings and elevate its status as a premier destination.
Genting Singapore’s second-quarter performance reflects a challenging period marked by a sharp decline in VIP revenue and profitability. While the company has faced significant headwinds, particularly from regulatory changes affecting VIP gaming, its strong performance in the first half of the year and ongoing expansion projects offer a positive outlook for the future. As Genting Singapore continues to navigate these challenges, its strategic initiatives and development plans will be crucial in shaping its recovery and long-term success.