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Genting Singapore shares plunge 10% on price tag for RWS expansion, higher gaming taxes

Genting Singapore shares plunge 10% on price tag for RWS expansion, higher gaming taxes

Artist’s impression of the Evolution & Extinction zone at Singapore Oceanarium. (Image: Resorts World Sentosa)

SINGAPORE: Shares of Genting Singapore fell to its lowest in more than three months on Thursday (Apr 4) as investors and analysts reacted to a S$4.5 billion expansion plan by Resorts World Sentosa (RWS) and an increase in gambling taxes and casino entry levies.

Shares of the casino operator fell as much as 10.3 per cent to S$0.96, the lowest since Dec 26 last year, before closing down 9.35 per cent at S$0.97.

A S$9 billion expansion of Singapore's two integrated resorts - RWS and Marina Bay Sands - was revealed by Singapore authorities on Wednesday. This additional investment is almost two-thirds their initial investment in 2006, which was about S$15 billion.

READ: Singapore’s two integrated resorts set to grow with S$9 billion investment plan

READ: Casino entry fees for Singaporeans, PRs to rise by 50%

The Singapore Government also announced a hike in casino entry fees for Singaporeans and permanent residents as well as higher taxes on gaming revenues.

As part of its S$4.5 billion investment, Genting Singapore's RWS will extend Universal Studios Singapore to include two new attractions - Minion Park and Super Nintendo World. 

Also in the pipeline is an attraction called Singapore Oceanarium - a rebranding of the S.E.A. aquarium after it is expanded by more than three times.

It will also add a new waterfront lifestyle complex and two new destination hotels with up to 1,100 rooms.

Maybank Kim Eng in a research report called the investment plan "visionary" but warned of "short-term pain before long-term gain".

It downgraded Genting Singapore to hold from buy, saying that the newly announced casino entry levy and tax rate hikes could weigh on short-term earnings before its potential is realised in 2024-2025.

The report also cut Genting Singapore's earnings estimates by 6 to 16 per cent, citing the raised casino entry levies.

It said it was "most positive" about the additional 1,100 hotel rooms planned, as there is a "strong historical correlation between room nights sold and gaming revenue".

Downgrading Genting Singapore's stock from buy to neutral, RHB said its new call was in view of RWS' higher-than-expected capital expenditure and the hike in gaming tax.

It cited key upside and downside risks as "fluctuations in luck factor, slowdown/uptick in tourist arrivals and gaming volume, strengthening/weakening of the Singapore dollar, and gain/loss of market share".

OCBC Investment Research maintained its buy rating, stating that when fully developed, new facilities will be able to capture more meetings, incentives, conferences and exhibitions attendees and more tourists to its expanded hotels and attractions.

Source: CNA/nc(aj)

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