Gaming | Genting drops most since 2010 as China crackdown hurts earnings

 Gambling revenue in Singapore and Macau has slumped as Chinese high rollers curb spending

Gambling revenue in Singapore and Macau has slumped as Chinese high rollers curb spending

 

Genting Singapore Plc slid the most in five years after reporting a 73 plunge in first-quarter profit as China’s anti-graft campaign kept mainland high rollers away from casino gaming floors.
Net income dropped to S$62.7 million (USD47.4 million) in the three months ended March 31 as gaming revenue slid 26 percent, the casino operator said in a statement after the close on Thursday. The stock Friday slumped as much as 7.9 percent, the most since January 2010, before paring losses to 5.9 percent as of 11:36 a.m. in Singapore.
“We expect continued weakness in the VIP segment due to the anti-corruption drive in China,” CIMB Group Holdings Bhd analysts Jessalyn Chen and Kenneth Ng wrote in a report. The brokerage downgraded its rating on Genting to hold from add and cut its price target to S$1.02 from S$1.20.
Gambling revenue in Singapore and Macau has slumped as Chinese high rollers curb spending to avoid scrutiny from their government amid President Xi Jinping’s crackdown on corruption. Rules restricting Macau-style junkets in Singapore make it more difficult for casinos to collect debts from mainland VIPS, who accounted for about half of the city-state’s gaming revenue, Union Gaming Advisors said in March.
“Our premium gaming business continues to come under stress due to regional environmental factors,” Genting said in its statement. “We do not expect any respite in the medium term.”
Genting said Thursday it has adopted a cautious approach in granting credit to VIP customers. The casino operator posted a S$76.3 million impairment loss on trade receivables, up 30 percent from the same quarter a year earlier.
The company “could also see a similar provision in the coming quarter as collections are more difficult and could remain challenging,” Carey Wong, an analyst at OCBC Investment Research, wrote in a note. The brokerage downgraded Genting to sell, while lowering its share-price forecast to S$0.95 from S$1.03. Jonathan Burgos, Bloomberg

Categories Business