Here's Genting Singapore's battle plan after suffering 26% profits drop

More foreign visitors targeted.

According to OCBC Investment Research, for 1H13, Genting Singapore's revenue fell nearly 7% to S$1377.6m, meeting 50.3% of its FY13 forecast, while net profit slipped some 26% to S$256.1m, but still met 63.8% of its fullyear forecast.

OCBC noted that Genting has embarked on a focused strategy to drive more foreign visitor arrivals to deliver volume mass market play, which typically yields better margins compared to the VIP segment.

"It also intends to focus on growing its non-casino business, where we believe operations should be entering a steady state. In 2Q13, Universal Studios saw 10k daily visitors with an average spend of S$83, while Marine Life Park welcomed 9k visitors with a S$26 average spend," said OCBC.

Here's more:

Genting Singapore (GS) reported 2Q13revenue of S$707.9m, +0.8% YoY, where the non-gaming segment saw a healthy 19% growth, which offset a 2.4% drop in the casino business (affected by lower win percentage of 2.51% (versus 2.85% theoretical) despite a 30% jump in rolling volume).

Nevertheless, adjusted EBITDA margin recovered to 43.9% in the quarter, compared to 37.3% in 1Q13 and 44.3% in 2Q12.

Going forward, management remains slightly cautious about the slower growth forecast for the Chinese economy, although GS notes that it has not seen any impact on its Chinese customers; but it will continue to monitor the situation.

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