Phase 2 Resorts World Sentosa only starts 2022: analyst

Phase 2 Resorts World Sentosa only starts 2022: analyst

Construction of a second phase at the Resorts World Sentosa casino complex (pictured) in Singapore will only start in “early 2022” due to “disruption across the supply chain and labour force” wrought by the Covid-19 pandemic, said a Tuesday note from Union Gaming Securities LLC, citing commentary by management at Genting Singapore Ltd, the venue’s promoter.

“The company is also looking at major design changes to cater to the health/safety requirements as well as the changing market dynamic as it relates to VIP,” wrote analyst John DeCree.

Genting Singapore had already said it has doubts its VIP casino segment will return to pre-pandemic levels of business, due in part to a change to China’s legal framework, taking effect on March 1, that criminalises anyone who helps mainland citizens take part in “cross-border gambling”.

Mr DeCree noted in his memo that Genting Singapore had “reaffirmed its commitment to the scope of RWS 2.0,” as the expansion has been dubbed by the resort promoter, and a capital expenditure budget of SGD4.5 billion.

A spending commitment of that amount was made respectively by Singapore’s two casino resort operators – the other being Las Vegas Sands Corp, promoter of Marina Bay Sands – in April 2019, as the Singapore government said it would extend the duopoly rights of the two operators until 2030.

At the time, Genting Singapore had said in a press statement that enlargement of Resorts World Sentosa would be “delivered in phases with new experiences opening every year from 2020 to a projected completion around 2025”.

But in August last year, a senior official of Singapore Tourism Board said it was “inevitable” there would be delays to the expansion of the city-state’s two casino resorts, due to the pandemic’s disruption to the construction sector.

Earlier this month, Genting Singapore posted a SGD69.2-million (US$52.5 million) net profit for full-year 2020, down 89.9 percent from the previous year.

But the group’s earnings before interest, taxation, depreciation and amortisation (EBITDA) declined at a more modest rate; namely 68.2 percent year-on-year, to SGD372.6 million.

Union Gaming’s Mr Decree noted fourth-quarter adjusted EBITDA had “gained a solid 41.8 percent quarter-on-quarter,” to SGD211.3 million, “driven by a combination of cost control and government initiatives and subsidies”.

Mr DeCree noted however that the outlook for Resorts World Sentosa “remains muted until international travel resumes”.

He added that, during a call with analysts, management suggested that 2021 demand and visitor volume would “look very similar to second-half 2020”.

Visitor volume in December “was strong but management indicated occupancy had fallen off significantly in January,” wrote Mr DeCree.

“Leisure travel is expected to remain low but business visitation could begin to recover more quickly,” he added.

At the “current trajectory”, vaccination of the Singapore population against Covid-19 “could be completed by third-quarter 2021, which would help open up the local market considerably,” said Union Gaming, echoing a recent forecast by Singapore’s government.

“Until then, management does not expect any major easing in travel restrictions, which in our view translates to the recovery plateauing in Singapore for now”, Mr DeCree noted.

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