Feb. 22 (Bloomberg) -- Paul Wilkie was out of breath as he got off the Battlestar Galactica roller coaster at Universal Studios Singapore. “It was unbelievable, I’m still dizzy.”
Wilkie, 28, who works at a radio station in Australia, also plans to drop by the casinos run by Genting Singapore Plc and Las Vegas Sands Corp., where he and his friends will bet on poker, blackjack and “really anything and everything.”
Genting Singapore, which runs the theme park, reported recurring profit of S$657 million ($514 million) in the first year of its Resorts World Sentosa, and is relying on visitors like Wilkie to boost revenue. Earnings at the world’s third-biggest casino company by market value may surge this year, according analysts surveyed by Bloomberg.
Singapore’s two casinos are benefiting from the attractions at Resorts World Sentosa’s theme park, said Aaron Fischer, a Hong Kong-based analyst at CLSA Ltd. “The casinos are a major draw card, but Universal Studios is also providing Resorts World and Las Vegas Sands’ Marina Bay with new customers, which provide a more predictable revenue base and generate higher margins.”
Tickets to the park were sold out on online yesterday as Universal Studios staged an official reopening of the attraction based on the Battlestar Galactica television series after shutting it down for almost a year to fix a “ride component failure.”
Genting Singapore has surged almost fivefold in the past two years in Singapore trading, making it Asia’s second-biggest casino company by market value.
Full-year net income of $37.8 million announced by the casino operator today missed the S$615 million average forecast of 21 analysts surveyed by Bloomberg as financing costs increased and high-stakes gamblers got luckier. Net income will reach S$1.12 billion this year, according to the analysts’ average estimate.
“We are not changing our positive view, which is based on the huge free cash flow generated by the property,” Fischer said after the earnings announcement. Last year’s profit from continuing operations of S$657 million, compares with a year-ago loss of S$282 million.
Fourth-quarter adjusted earnings before interest, taxes, depreciation and amortization of S$386 million matched his estimate, Fischer said.
The $4.7 billion Resorts World also plans to open a marine museum, a water park and two hotels starting from the middle of the year. Another ride based on the Transformers movies may open by the end of the year, according to the company.
Singapore’s casinos have provided “a new leg of growth for the Singapore economy,” said Song Seng-Wun, an economist at CIMB Research Pte. in Singapore. “If the macro environment continues to stay favorable, there’s no reason that the resorts won’t be able to attract a steady stream of visitors.”
The city state’s economy grew by a record 14.5 percent last year, helped by the S$420 million in net revenue contributed by Genting Singapore and Las Vegas Sands Corp.
Genting Singapore’s “more holistic approach” will help growth in the coming year, said Carey Wong, senior investment analyst at OCBC Investment Research Pte. “Somebody with the excuse to bring their families for an outing to Universal Studios is also more prepared to spend money at the casino.”
Today’s earnings report “threw our numbers a little bit,” Wong said. Still, “cash flow wise, they’re pretty good," he said, citing Genting Singapore’s S$298.7 million net cash inflow from operating activities in the fourth quarter. For the full year, cash flow was S$1.41 billion.
The reopening of the Battlestar Galactica ride ‘‘will allow for a 20 to 25 percent increase in ticket sales,” said Fischer, who forecast earnings before interest, taxes, depreciation and amortization of S$2 billion this year for Genting Singapore.
Some of the visitors to the theme park will visit the casinos, said Huei Suen Ng, who covers gambling companies with Fischer at CLSA. They recommend buying Genting Singapore’s stock.
Vincent Khoo, an analyst at UOB Kay Hian Holdings Ltd., predicts a more modest profit of S$886 million, because of the “fairly developed market” the company operates in. “I can’t see how the industry can grow leaps and bounds,” and the non-casino businesses may contribute less than 10 percent to the company’s growth, he said.
Genting Bhd., owner of a controlling stake in the Resorts World operator, on Feb. 7 fell 3.9 percent to 10.90 ringgit in Kuala Lumpur trading after Citigroup Inc. cut its revenue forecast for the Singapore casino unit.
Still, Singapore aims to attract 17 million visitors and triple annual tourism revenue to S$30 billion by 2015. Tourism revenue in the Southeast Asian economy with the highest gross domestic product per capita rose 49 percent to S$18.8 billion last year.
Las Vegas Sands announced on Feb. 17 it plans to ask Singapore for more land because it’s running out of space at its $6 billion Marina Bay Sands, which houses a sky park and a 160 meter-long swimming pool atop three 55-floor hotel towers, along with its casino, convention facilities, shops and restaurants.
The casino resorts’ “amenities will result in attracting higher volumes of mass-market tourism traffic,” said Jonathan Galaviz, who analyzes tourism and the gambling industry as managing director of Galaviz & Co. “Multibillion dollar integrated resorts need thousands of people providing foot traffic everyday. Having only a few hundred millionaires roaming around won’t cut it in the long-run.”
Out of Singapore’s 11.6 million visitors last year, 4.8 million, or 41 percent, were from Southeast Asia, according to government figures. Chinese tourists came in second at 1.2 million, or 10 percent.
Hentje Pongoh, a coal trader from Indonesia, spent a whole day at Universal Studios Singapore, drawn by rides such as the Battlestar Galactica roller coaster. While he ran out of time to gamble, the 39-year-old said he will return “maybe next month” to visit Resorts World Sentosa’s casino.
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