Genting Singapore profit falls as VIP gambling bad debts soar

TAGs: Australia, Echo Entertainment, Genting, Genting Singapore, Japan, Resorts World Sentosa, universal studios japan

genting-singapore-bad-debtsGenting Singapore, the Genting Bhd. subsidiary that operates the Resorts World Sentosa integrated resort, saw second quarter profits fall 22% thanks to a surge in VIP gambling debts the company believes are uncollectible. Revenue in the three months ending June 30 rose 6% year-on-year to S$751m (US $603.2m) and earnings nudged up 1% to $313.8m but profits fell to $131.7m.

The chief culprit behind the murdered profit was an $82m impairment charge on VIP debts between nine and 12 months old that management feels will be a challenge to collect. The bad debt provision is $50m higher than the same period last year.

Gaming revenue rose 9% in the quarter, accounting for 79.5% of all revenue in Q2, thanks to higher VIP gambling turnover and improved win rate. However, Union Gaming analysts said management’s tone suggested it doesn’t expect the VIP party will carry on into the second half of the year, reflecting the VIP-AWOL trend currently plaguing Macau.

Genting Singapore remains bullish about its chances of landing one of the coveted casino licenses in Japan, but the company was moved to issue a clarification of a Bloomberg News article that claimed Genting was looking to team up theme park operator Universal Studios Japan (USJ). The Bloomberg interview quoted USJ CEO Glenn Gumpel saying USJ was having talks about a possible Japan casino partnership with Genting Bhd., MGM Resorts and Caesars Entertainment. Genting responded by saying “neither Genting Bhd. nor Genting Singapore are in talks with USJ on any such possible partnership.”

Meanwhile, Australian gaming regulators insist they haven’t been giving Genting Hong Kong the runaround. For over two years, Genting HK has been trying to raise its stake in Aussie casino operator Echo Entertainment beyond the existing 10% cap but have made little progress. This week, the chairman of New South Wales’ Independent Liquor and Gaming Authority (ILGA) said the fault was entirely Genting’s for delays in filing the necessary paperwork.

Chris Sidoti told the Australian Financial Review that ILGA requests for info from Genting “remain unfulfilled” and that in July the ILGA had requested a meeting with Genting’s overall supreme being, Lim Kok Thay. Sidoti also rejected suggestions that the ILGA had displayed favoritism toward Echo rival Crown Resorts, whose request to boost its Echo stake was approved with comparative ease, only for Crown to dump its Echo stake shortly afterward.

Sidoti felt compelled to make the public declaration that the ILGA wasn’t playing favorites after ILGA CEO Micheil Brodie publicly declared that the approval of Crown Sydney was “one of the fastest assessments of a casino applicant in history.” Perhaps Genting’s Lim should get into a fistfight on an Aussie streetcorner. Worked for James Packer


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