KUALA LUMPUR: Genting Singapore PLC has confirmed that Resorts World at Sentosa Pte Ltd (RWS) was issued a casino licence by the Singapore government.

Managing director Justin Tan Wah Joo said on Monday, Feb 8 that RWS, an indirect wholly-owned subsidiary of the Genting Singapore, was issued the licence by Singapore's Casino Regulatory Authority on Feb 6.

Meanwhile, ECM Libra Research said it came to understand that RWS will open its doors to casino patrons on Monday. To open a week before Chinese New Year (CNY) will allow RWS to capture the higher margin mass market CNY volumes.

"With Marina Bay Sands (MBS) slated to open between April and June, RWS will take the lion’s share of the Singaporean gaming market which we value at S$4 billion. With two to four months lead time, avid Singaporean gamblers will opt to pay the annual levy of S$2,000 rather than pay SGD100 per 24 hour visit and commit themselves to gambling at RWS," it said.

ECM Libra Research said according to Singaporean junket regulations, junket operators have to apply for one licence per casino. Junket operators would have already anticipated that RWS will open before MBS and would have applied for their licence at RWS first (three to four months processing time). Therefore, RWS will have a first mover advantage over MBS in the VIP segment too.

"With these first mover advantages, RWS is able to help contain cannibalisation on sister casino, Resorts World at Genting (RWG), by cross selling before MBS opens. We understand that the purpose of establishing the Simon Chelsea Premium Outlets and potentially hotels and theme parks in Johor is to direct RWS-RWG Malaysian patrons away from MBS," it said.

The research house said it left its earnings estimates unchanged and maintained its RM7.50 TP based on 20% discount to RNAV/share of RM9.33. As Genting’s share
price has depreciated recently, it upgraded its call from Hold to Buy as its TP implies 11% upside potential.

ECM Libra Research believed Genting will trade closer to its RNAV/share on the euphoria of RWS opening ahead of MBS. Also, with the opening of RWS behind them, management can concentrate of expanding via M&As from hereon onwards.