Will it be a royal flush or royal rumble for Genting Singapore? Investors’ patience are wearing thin as Genting Singapore continued its bid to enter the Japan market, one of the last untapped markets in the world. Considering the fact that Japan is the world’s third largest economy, the pay-off could be tremendous for Genting Singapore. In view of this, it is no wonder that investors are fervently hoping that management would hit the jackpot (no pun intended).
Currently, Genting Singapore is making two bids for integrated resorts in Japan – Osaka and Yokohama. What is the chance of Genting Singapore winning the bids? In my point of view, the Group stands a high chance of winning at least one bid. It is only a matter of when, and not if, that Genting Singapore win at least one of the Japan IR bids. In this article, I will share my views on this counter.
Note that this is an opinion article and not meant to be a financial advice. Please do your due diligence or engage financial advisors before investing in the stock market. Furthermore, I am not vested and have never invested in Genting Singapore share before. Whether Genting Singapore share price will surge or collapse has no impact on me. Thus, this article is not meant to induce readers to make any form of investment decisions.
Genting Singapore becoming one-trick pony?
In the blink of an eye, the integrated resort of Genting Singapore is already 10 years old! Just like Japan, Singapore previously did not have casinos. In 2005, the government granted two casino licenses, one to Genting Singapore, and the other to Las Vegas Sands Corp. For Genting Singapore, its integrated resort boasts the Universal Studios Singapore, Adventure Cove Waterpark and the S.E.A Aquarium. These offerings made its integrated resort a compelling offering to tourists.
For sure, the success of Genting Singapore will turn Japan authorities’ head. But winning the bid is not a guarantee as there are competitors. It is likely that the Group is aiming to first win the Osaka’s IR bid. The Yokohama bid should be a form of “insurance”. In any case, based on Singapore case study, it is highly unlikely that the Japan authorities would grant two IR licenses to the same company.
Genting Singapore adventure in Japan came at a time when the IR operator risks becoming a one-trick pony. In terms of revenue for FY2018, the casino operations contributed $1.68 billion, vis-à-vis $834 million from the non-gaming segment. The Group does not give profit breakdown from the business segments. But I believe the gaming segment should contribute the lion share of the profits.
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