Stung by a drop in operating profit and a lower than expected VIP win rate, casino and resorts operator Genting Singapore Plc reported a 16.6 percent net profit tumble in the fourth quarter of 2017.
In a filing with the Singapore Stock Exchange, Genting Singapore announced that its net profit for the last three months of 2017 slowed to SGD132.8 million (US$101 million) versus SGD159.2 million ($121 million) in 2016.
While its gross gaming revenue increased by 4.7 percent to SGD417.6 million in the fourth quarter, Genting said it wasn’t enough to offset the lower than expected VIP win rate and higher operating costs. Genting said its operating profit dropped 24.1 percent to SGD179.1 million ($136 million).
On the other hand, strong performance of the leisure and hospitality segment lifted Genting’s quarterly revenue by 4 percent to SGD580 million ($440.71 million), according to the company.
The daily average visitation for Genting’s major attractions—Universal Studios Singapore, S.E.A. Aquarium and Adventure Cove Waterpark—posted 6-9 percent growth while its hotel business remains robust with a 91 percent occupancy rate.
International advisory firm Union Gaming said Genting Singapore took a hit from a lower than expected VIP win rate of 2.7 percent.
“We are downgrading shares [of Genting Singapore] to Hold as the VIP growth story is clearly not as robust as Macau and mass continues to flat line,” Union Gaming analyst Grant Govertsen said in a statement. “The specter of cost acceleration is enough for us to move to the sidelines.”
Despite a lackluster Q4 performance, Genting Singapore managed to pull a 78 percent net profit increase for the financial year of 2017. Genting Singapore’s net profit for the 12 months ending December 31, 2017, rose to SGD685.6 million ($520.89 million) from SGD384.5 million ($292.13 million) posted two years ago.
Meanwhile, Genting Singapore said that it is preparing for the eventual bidding process for a casino license in Japan. The casino operator also announced its plans to curate and re-invest in new tourist facilities, and re-fresh existing products to remain attractive to its customers.