Analysts Raise VIP Estimates for Singapore Casinos

Brokerage Sanford C. Bernstein has pushed its estimates of 2017 VIP gross gaming by 18 percent, based mostly on the strength of one resort’s impressive performance.

In a note published Friday, analysts wrote that they expect VIP revenue for Marina Bay Sands and Resorts World Sentosa will come to nearly SGD2.35 billion ($1.72 billion), up from the firm’s previous estimate of about SGD 2 billion ($1.47 billion).

That growth will more than offset a slight 1 percent decrease in mass-market table game revenue that the first predicted in its note. Analysts also projected that there should be no significant change in the slots forecast for the Singapore market this year.

But most of this growth is going to the Marina Bay Sands, which is operated by the Las Vegas Sands Corp, rather than to Resorts World Sentosa, a Genting Singapore venue. According to the note, the brokerage predicts that the Sands will continue to be the dominant force in the market for the foreseeable future.

“We expect the approximately 38 percent (Genting) approximately 62 percent (Sands) GGR market share split to retain if not to shift in favour of Marina Bay Sands (especially in the mass market),” the brokerage wrote.

Analysts for Sanford Bernstein pointed to several advantages enjoyed by the Sands property over its only rival in the Singapore market.

“Marina Bay Sands has a better location in the centre of Singapore, greater MICE exposure and in our view, a superior management team,” the analysts wrote.

Singapore has been a particularly strong market for the Las Vegas Sands Corp this year. In a financial disclosure released this July, the company beat its quarterly forecasts in part thanks to a 38 percent growth in revenues at the Marina Bay Sands.

But that doesn’t mean that the market is an easy one for these companies to navigate. In its note, Sanford Bernstein noted that the smaller VIP player base in Singapore compared to markets such as Macau or Las Vegas made predictions of future revenue less precise.

“The Singapore market generally has a more volatile win rate than the Macau market, due to fewer VIP players and larger average bet size,” the firm wrote.

That uncertainty is only exasperated by the difficulty that Singapore casinos can face when trying to collect debts from their VIP clients. While there have been , the process is time-consuming and can run into difficulties due to the fact that Singapore doesn’t have reciprocal enforcement of judgements with China, where many of their VIP clients live.

These issues can have a real impact on a casino’s bottom line, with Sanford Bernstein saying that Resorts World Sentosa is particularly impacted by a “likely reluctance to expand VIP credit issuance.