Why Marina Bay Sands' 12% revenue jump is not impressive at all

Singapore resorts are still struggling.

According to CIMB, it was business as usual at Marina Bay Sands (MBS) in 2Q13. Total GGR came in at US$774m, up 12% yoy mainly because of last year’s low base. The underlying trend of the business shows that Singapore’s integrated resorts are struggling to show growth.

Here's more:

We retain Genting Singapore's (GENS) EPS forecasts and RNAV-based target price, which is pegged to 9x FY14 EV/EBITDA. We also maintain our Underperform rating. The main downside catalyst is continued provisioning for VIP receivables.

What Happened
MBS reported operating numbers for 2Q13. VIP betting turnover came in at US$14.4bn, up 25% but down 21% qoq. The win percentage was below par for the fifth straight quarter, at 2.53%.

VIP GGR came in at US$364m,down 20% qoq but up 31% yoy. Mass table GGR was flattish at US$272m, up 2% yoy but down 2% qoq. Slot revenue fell 3% on both qoq and yoybasis to US$138m. Adjusted EBITDA for the property came in at US$355m, 10% lower qoq but 18% higher yoy.

Receivables fell to US$1,059m from US$1,087m in 1Q13. However, we estimate that US$60m provisions were made in the quarter. Total provisions to date stand at US$378m.

What We Think
The MBS numbers showed that it wasvery much business as usual. The VIP market continues to be very narrow, driven by credit and high betting limits.

The mass market business continues to struggle for growth as yields have been maximised and there is limited scope for capacity expansion. GENS will report its 2Q13 on 6 Aug.

We are expecting S$308m adjusted EBITDA (+1.8% yoy) and S$156m net profit (+12.8% yoy). We are assuming that GENS pulled back on VIP credit following the cautiousoutlook by management in 1Q13.

However, if it maintained VIP liquidity, GENS is likely to beat our 2Q13 estimate.

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