The subdued regional economy and China's slowdown weighed on the first-quarter earnings of Genting Singapore, operator of Resorts World Sentosa.
Heftier-than-expected bad debt provisions of $92.4 million sent net profit slumping 83 per cent to $10.8 million from the $62.7 million posted a year earlier. Not helping were other charges, including a large foreign exchange loss.
Bad debt provisions swelled 21 per cent to $92.4 million from a year earlier, while finance charges grew by the same amount, coming in at $11.2 million.
The group's profit also took a hit from a net foreign exchange loss of $43.5 million, compared with a gain of $119.3 million a year earlier.
"Genting's earnings came in below our expectations owing to greater-than-expected bad debt provisions," Union Gaming Research said, which maintained a hold call on the stock.
"While we had expected continued bad debt write-downs through at least mid-year 2016, we were expecting the first quarter to be broadly in line with the fourth quarter's (bad debt provisions of) $45 million," Union Gaming managing partner Grant Govertsen said yesterday.
Genting management's tone on VIP remains decidedly bearish, he said.
AT A GLANCE
REVENUE: $608 million (-5%)
NET PROFIT: $10.8 million (-83%)
"With bad debt exceeding our expectations this quarter, coupled with an incrementally bearish outlook on credit collections over the next few quarters, a retooled credit policy initiated in March 2016 will take time to right the ship."
Revenue for the three months to March 31 slipped 5 per cent to $608 million. Gaming revenue fell 9 per cent to $450.5 million as the group continued to tighten its credit policy and exercise caution with its VIP gaming business.
Its mass gaming segment "started 2016 on a better note with strong electronic gaming machines' performance", it said. "We have seen encouraging progress with the implementation of our new marketing strategies to grow the foreign premium mass market," it added.
Still, according to Union Gaming, RWS continues to lag MBS on market share, even as MBS' casino revenues for the first quarter fell 28.3 per cent to US$453.1 million (S$622.8 million).
During the Chinese New Year period, Genting's attractions drew nearly 950,000 tourists, up 15 per cent year on year, contributing more than one-third of total visitor arrivals to Singapore, the group said.
"Our IR (integrated resort) hotels maintained a high occupancy rate of 92 per cent... Genting Hotel Jurong achieved an improved occupancy of nearly 90 per cent from 78 per cent in 2015," it said.
The casino operator reported earnings per share of 0.09 cent compared with 0.52 cent for the same period last year. Net asset value was 61 cents as at March 31, unchanged from Dec 31. No dividend was declared for the quarter.
Genting Singapore shares closed 1.9 per cent, or 1.5 cents, down at 78.5 cents yesterday.