The Casino Regulatory Authority (CRA) has approved junket licenses for two operators to work with Resorts World Sentosa (RWS). The CRA has rejected 12 other applications. These junkets, or international market agents (IMAs), can extend credit to high-rollers or organize trips for them to play at RWS in exchange for commissions. We believe that the move is generally positive for Genting Singapore (GS), as it will bring a new source of high net-worth players into its casino here. Secondly, the move should also lead to an improvement in GS’ credit risk. However, we believe it is still early days to revise our numbers as it may still need a while to get the junket operations running at full steam. Hence we maintain our BUY rating and S$2.02 fair value.
Two IMA licenses issued
The Casino Regulatory Authority (CRA) has approved junket licenses for two operators to work with Resorts World Sentosa (RWS). The CRA has rejected 12 other applications. The one-year licenses were issued to two Malaysian IMAs (international market agents) – Huang Yu Kiung and Low Chong Aun; and they can only bring in international high rollers. Meanwhile, the licenses can be revoked if the two fail to remain suitable. CRA also has the power to suspend the IMA license at any time.
Big hurdle cleared
While the CRA has only issued two licenses, we note that the move should lay rest to earlier concerns that the regulator is not keen to have junket operators in the Singapore gaming market. Indeed, Business Times reported that the CRA is currently evaluating other applications and conducting the necessary probity checks. We also understand that Marina Bays Sands (MBS) has not endorsed any junket license applications, suggesting that if the other junket operators are approved, GS could continue to maintain a significant lead-time over its rival.
Positive for GS
We believe that the move is generally positive for Genting Singapore (GS), as it will bring a new source of high net-worth players into its casino here. Secondly, the move should also lead to an improvement in GS’ credit risk as the two IMAs can also extend credit to their own high rollers. On the flipside, ongoing amendments to the Casino Control Act could mean more extensive financial reporting and credit assessments by IMAs and the new rules would mean RWS would need to exercise greater diligence over the IMAs.
Maintain BUY with S$2.02 fair value.
However, we believe it is still early days to revise our numbers as it may still need a while to get the junket operations running at full steam. Hence we maintain our BUY rating and S$2.02 fair value.
The Casino Regulatory Authority (CRA) has approved junket licenses for two operators to work with Resorts World Sentosa (RWS). The CRA has rejected 12 other applications. The one-year licenses were issued to two Malaysian IMAs (international market agents) – Huang Yu Kiung and Low Chong Aun; and they can only bring in international high rollers. Meanwhile, the licenses can be revoked if the two fail to remain suitable. CRA also has the power to suspend the IMA license at any time.
Big hurdle cleared
While the CRA has only issued two licenses, we note that the move should lay rest to earlier concerns that the regulator is not keen to have junket operators in the Singapore gaming market. Indeed, Business Times reported that the CRA is currently evaluating other applications and conducting the necessary probity checks. We also understand that Marina Bays Sands (MBS) has not endorsed any junket license applications, suggesting that if the other junket operators are approved, GS could continue to maintain a significant lead-time over its rival.
Positive for GS
We believe that the move is generally positive for Genting Singapore (GS), as it will bring a new source of high net-worth players into its casino here. Secondly, the move should also lead to an improvement in GS’ credit risk as the two IMAs can also extend credit to their own high rollers. On the flipside, ongoing amendments to the Casino Control Act could mean more extensive financial reporting and credit assessments by IMAs and the new rules would mean RWS would need to exercise greater diligence over the IMAs.
Maintain BUY with S$2.02 fair value.
However, we believe it is still early days to revise our numbers as it may still need a while to get the junket operations running at full steam. Hence we maintain our BUY rating and S$2.02 fair value.
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