Genting's VIP business turnover to slump 5-10%

The full potential of VIP GGR growth will now depend on the licensing of more junkets, says CIMB.

Here's more from CIMB:

We believe that the disappointing 2Q12 results are not due to a sudden structural adverse turn in the business but a transitional period where the business model adjusts to regulatory factors to ensure sustainable growth. The key issue is the VIP business, which currently accounts for 60% of table GGR. Without credit provided by the junkets, we believe RWS is prudently scaling back on its balance sheet exposure in receivables, which invariably will temper VIP GGR growth.

From what we understand, the full potential of VIP GGR growth will now depend on the licensing of more junkets to provide credit as the Singapore IRs are unwilling to take on more credit risk. We therefore cut our VIP business assumptions to a 5-10% contraction in betting turnover compared to 4-5% growth previously. We now forecast a levelling out of VIP GGR.

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