MBS rakes in record Q3 mass gaming gains

Singapore

A SURPRISINGLY strong performance in its mass gaming segment has helped Marina Bay Sands (MBS) rake in its best quarterly performance in this area ever since the integrated resort opened here five years ago.

It delivered a record mass gaming win-per-day in Singapore dollar terms for the three months ended Sept 30, which its owner Las Vegas Sands (LVS) said showed the sustainability of the local gaming industry amid regional headwinds.

Marina Bay Sands' adjusted property Ebitda (earnings before interest, taxes, depreciation, and amortisation) climbed 10.8 per cent from the previous year to US$389.7 million for the three months to Sept 30, Nevada-based Las Vegas Sands said in its third-quarter earnings release on Thursday, adding that this was despite the negative impact of a stronger greenback.

That lift was driven largely by the mass gaming segment, the group said, adding that VIP volume was also "healthy".

The high-roller segment in Asia has softened following a corruption crackdown in China plus an economic slowdown in regional economies. High roller visits to Singapore are also reportedly down as casino operators reduce credit to avoid a pile-up of bad debt. A substantial amount of impairments due to bad debt has been dragging down Genting Singapore, which operates Resorts World Sentosa, over the past few quarters.

But the strength of the mass gaming segment in Singapore has helped MBS become an ace up Las Vegas Sands' sleeve as Macau falters - the earnings boost from MBS helped to offset the 47 per cent plunge year-on-year in net income from Las Vegas Sands' Macau operations for Q3.

LVS chairman Sheldon Adelson said that MBS's mass win-per-day was US$4.8 million, up 8 per cent after adjusting for a stronger greenback. The solid performance was mainly due to the "successful execution of our strategy to bring premium mass customers from throughout Asia to Singapore", he said, according to an earnings call transcript.

Rob Goldstein, president and chief operating officer of LVS, also said in the earnings call that MBS's business was "not China dependent . . . it's very sustainable". "That building is exemplary where it's at physically, how it looks architecturally, the food and beverage, the retail is pretty iconic. We're just very proud of it and I think it's going to continue to do very well in the future, so all good signs coming out of Singapore."

Calling MBS's record non-VIP win per day figures "a significant milestone given the challenges facing the Asian gaming markets", research outfit Union Gaming said in a report on Thursday that MBS's VIP volumes were also "impressive".

It added that MBS was on track to generate more than US$1.5 billion of Ebitda in 2015. "MBS has proven to be far more resilient with less reliance on junkets and the Chinese VIP player and faces less direct competition in the near term. Ultimately, we believe that the strong performance from MBS is an incrementally more positive catalyst for LVS's overall valuation."

GMA senior research analyst Jonathan Galaviz said in an e-mail that the integrated resort at Marina Bay "was always intended by the government to capture business traveller mass market activity and I think it continues to work well".

But he cautioned that despite the relative health of Singapore's tourism industry right now, the IRs will need "stronger macro tourism visitation into Singapore if they want to leverage earnings increases moving forward".