SINGAPORE - Shares of Genting Singapore slumped to their lowest since March 2010 on Wednesday after the casino operator missed expectations with a 36 per cent plunge in fourth-quarter profit on Tuesday, hurt by poor performance in its VIP business and bad debts.
Genting's shares broke through its support of $1 this morning, dropping as much as 8 per cent to a session low of 96.50 cents. It was the most active counter in the 30-share Straits Times Index on Wednesday morning. By 10:30am, nearly 79 million Genting shares had changed hands, nearly four times the average full-day trading volume over the last 30 days.
The shares recovered a bit to trade at 98.50 cents, down 5.7 per cent, at 11am. The next level of support for the stock remains at $0.85, its low in 2010.
Maybank Kim Eng, which maintained a hold call on Genting, said the casino operator blamed the drop in VIP volume on "difficult operating conditions in China and to a lesser extent, Southeast Asia. It does not expect VIP volumes to improve meaningfully. As it finds it increasingly difficult to collect debts from Chinese VIPs, it intends to lend less. As a result, it could generate less VIP volume."
A larger-than-expected bad debt provision of nearly $82 million for the fourth quarter hit the Resorts World Sentosa operator's earnings. Bad debt provisions for the full year jumped 42 per cent to $262 million year on year.
Maybank Kim Eng analyst Mr Yin Shao Yang said: "We are not overly-concerned about its low VIP win rates and high provisions. The former should normalise to their long-term historical average. The latter can be managed via more stringent credit checks, we believe. We are more wary that high provisions for doubtful debts will cause Genting to lend less and generate less VIP volume."
Gaming revenue fell 9 per cent to $461.3 million, as its premium player business was hit by a "significant below average win percentage and (VIP) rolling volume".
CMC Markets analyst Nicholas Teo said "this number highlights their loss of market share to Marina Bay Sands (MBS) primarily in the foreign premium mass business. MBS, in its fourth quarter results released last month, had revealed solid contributions from this segment, especially from customers from Indonesia, Japan and even Malaysia. Genting's home market!"
MBS' fourth-quarter net turnover jumped 27 per cent to US$838.6 million, on the back of casino revenue increasing 34 per cent to US$674.4 million.