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Rival's results bode well for Marina Bay Sands

14 May 2010

SINGAPORE -- The Singapore subsidiary of Malaysia-based casino operator Genting reported first quarter earnings today but analysts were reading more into the figures than just the raw numbers.

They believe the results from Genting's recently opened casino project on Singapore's Sentosa Island gives a glimpse into how Las Vegas Sands Corp.'s Marina Bay Sands is performing.

Genting said Resorts World Sentosa, which opened Feb. 14, generated revenues of $242.5 million over a 46-day period and cash flow of $78.9 million.

On per-day basis, Union Gaming Group principal Bill Lerner estimated the casino is generating approximately $5.3 million per day. Based on the initial figures, Lerner estimated Resorts World could collect $1.9 billion in revenues on a 12-month basis, or generate $635 million in cash flow, a margin of 33 percent.

He cautioned the casino was probably generating about $7 million to $8 million a day in revenues right after opening and peaked by the end of February.

"The margin profile is likely to improve once the property gets beyond its opening ramp-up phase, due to over-staffing in the early days, and total revenues should grow as the market matures," Lerner said.

So what does this mean for the $5.7 billion Marina Bay Sands, which opened portions of the resort on April 27 and will celebrate its grand opening on June 23?

Lerner thought Marina Bay Sands was cutting into Genting's revenues but the entire market should grow once both properties were fully opened.

JP Morgan gaming analyst Joe Greff thought Genting's numbers implied healthy initial results and were, "Much better than anything experienced in U.S. markets and reflective of a relatively low gaming tax rate and limited gaming capacity in the Singapore market. We think these early results bode well for Marina Bay Sands."

Greff projected Marina Bay Sands would produce annual gaming revenues of $2.1 billon by 2012 with cash flow of $900 million.