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Resorts World Sentosa operator may bid for casino licence to tap influx of foreign tourists

KUALA LUMPUR: Genting Singapore, the operator of Resorts World Sentosa, may likely be the front-runner to secure a license for an integrated resort (IR) and casino in Thailand if the Thai government decides to deregulate the industry, according to analysts.

The gaming group is one of the top four casino operators in the world, vying for the license to operate a casino in Thailand as the next big frontier for global gaming expansion due to the influx of Chinese tourists.

According to reports, MGM Resorts International, Galaxy Entertainment Group Ltd., and Las Vegas Sands are the other three casino operators who are considering opening gambling establishments in Thailand.

Genting Group, a well-known company in Southeast Asia, is a strong competitor due to its operational know-how, in-depth knowledge of the market, and decades-long business network, according to an analyst.

"After all, Genting currently operates in Singapore and Malaysia, with them being the pioneers since the 1965s. They have the operational know-how, local market knowledge, and familiarity of the geographical and business networks.

"Their integrated resort, theme park, and entertainment model is a compelling proposal to the Thai government," said Tradeview Capital Sdn Bhd chief executive officer, Ng Zhu Hann.

Ng told Business Times that because of the enormous number of foreign visitors to Thailand each year, many large groups are considering the Thai market if the government decides to grant a license for casinos.

Thailand is one of the most popular travel destinations in the world, especially for Asian travelers. 

According to Thailand's Ministry of Tourism and Sports, over 27 million foreign visitors arrived in Thailand in 2023. 

With 4.4 million arrivals, Malaysia was the leading source market for foreign visitors to Thailand in 2023. China came in second with 2.7 million, followed by Singapore with 1.9 million, India with 1.6 million, and Malaysia with 4.7 million.

"Tourism is the third largest gross development product contributor for the country, hence, if there is a casino, it will likely further spur tourism numbers," he said. 

Maybank Investment Bank Research (Maybank IB) analyst Samuel Yin Shao Yang believes that Genting Singapore may put in a joint bid for the Thai IR license.

"While we acknowledge that Thai IRs are more likely to be a threat to Genting Singapore than to Genting Malaysia, we note from history that Genting Singapore is not averse to expanding overseas to partially stave off competition," he said.

"Recall that Genting Singapore tried to expand into Jeju, South Korea, until November 2016 and Yokohama, Japan, until September 2021 in order to partially stave off competition from them. 

"Thus, we do not discount the possibility that Genting Singapore may form a joint venture to bid for the Thai IR license," it said.

Meanwhile, Maybank IB expects Genting Singapore's earnings to return to pre-Covid levels in 2024, shrugging off the liability of recent tax increases, thanks to the return of Chinese tourists.

"We expect most of the growth in gaming revenue this year to come from Chinese tourists.

"Even before 3Q2023, the mass market (which traditionally contributes around 75 per cent of earnings) was already hitting pre-Covid levels, despite the lack of Chinese tourists, due to new migrants and wealth created by higher property prices.

"The return of Chinese tourists en masse in 3Q2023 drove mass market gross gaming revenue to 8.0 per cent above the FY2019 quarterly average and VIP volume to 36 per cent above the FY2019 quarterly average," Yin said.

In fact, the 3Q2023 VIP volume of SG$11.3 billion was the highest since 2Q2015, Maybank IB said.

Genting Singapore's net profit rose 59 per cent to S$216.3 million for the third quarter ended September 30, 2023, from S$135.8 million in the corresponding year-ago period, while revenue was up 33 per cent to S$689.9 million for the quarter, from S$519.7 million a year ago. 

Of this, revenue from its gaming segment rose 20 per cent on the year to S$459.6 million, while non-gaming revenue jumped 68 per cent to S$230.1 million.

Maybank IB expects this growth to consolidate and continue in FY2024 as seat capacity for flights from China to Singapore recovers.

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