Impact of New Casino Taxes on Genting Singapore’s H1 Earnings in Casino Games Industry

The casino-games business recorded revenue of S$663.1m (£399.3m/€472.2m/US$481.8m) for the half-year, showing a year-on-year increase of 19.5%. Gaming revenue rose by 7.5% to S$475.2m. Hotel room revenue amounted to S$63.6m, while attractions revenue more than doubled to S$69.7m. Other non-gaming sources contributed S$43.6m. The surge in demand for casino gaming due to the impact of Covid-19, along with challenges in international travel, enabled the company to achieve this recovery in the first half of 2022. International tourism visitorship remained significantly below pre-pandemic levels due to limited flight capacity, high airfares, and varying reopening protocols in regional markets. Rental income declined to S$6.7m, but hospitality and support services generated S$4.4m, indicating a significant improvement compared to 2021. However, despite the increase in revenue, costs of sales grew faster at 33.4% to reach S$463.0m. This was due to new taxes introduced as part of a gaming industry overhaul in Singapore, including the establishment of a new regulator and new definitions of illegal gambling. Consequently, Genting Singapore’s gross profit declined by 3.8% to S$200.1m. Operating expenses increased, primarily due to impairment of property, resulting in a 9.4% decline in operating profit to S$110.2m. After accounting for finance costs, joint ventures, and taxes, Genting Singapore reported a net profit of S$84.4m, reflecting a 4.3% decrease compared to the previous year. Earnings per share also decreased from S$0.73 to S$0.70. However, adjusted earnings before interest, tax, depreciation, and amortization (EBITDA) increased to S$289.0m, up from S$256.8m in the same period of 2021. There were subsequent reports alleging that MGM Resorts approached Genting Singapore for a potential takeover, which Genting denied.