Is Genting losing to Marina Bay Sands?

The group has been losing gaming marketshare to Marina Bay Sands,
especially in its VIP gaming business.

DMG says its VIP rolling chips volume stayed relatively flat compared
to MBS' whopping 37% jump in 3Q11.

Here's more from DMG:

We believe that RWS' more cautious VIP credit policy amid the global
uncertainties and its lower number of available rooms at 1,300 vs MBS'
2,600 may have led to MBS gaining market share, which stood at 45%:55%
in favor of MBS. On an adjusted theoretical hold rate comparison, RWS'
daily net gaming revenue of S$6.7m vs MBS's S$9.2m implies an
annualized gaming market worth S$5.8bn in Singapore.

But ramping up luxury hotel capacity in 4Q11 should mitigate the
downside. The group is expected to open up 200 more luxury hotel rooms
at the Equarius Hotel and 20 high-end beach villas from end-4Q2011
onwards which will largely cater to its premium high rollers. The
importance of the additional VIP room capacity in driving incremental
growth in VIP gaming volume must not be under-estimated as nearly 80%
of the group's VIP customers comprises foreigners.

Hence, enhanced room offerings at the resort itself is an important
factor, one which the Western Zone due for completion by mid-2012 aims
to address. Of the group's current capacity of 1,300 rooms, only 110
in Crockfords Tower cater to premium VIP customers. As such, merely
adding 200 more luxury rooms will more than double the group's premium
room capacity.

The stock, at a FY12 EV/EBITDA of 10.1x, is trading at a 17% to 21%
discount to its Macau gaming peers, which has more than priced in the
relatively slower gaming growth in Singapore relative to Macau. The
eventual legalization of junkets in Singapore, on which management is
optimistic on materializing soon, as well as new VIP room capacity
coming on stream in 4Q11, may be a key re-rating catalyst. Maintain
BUY and fair value at S$2.14.

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