Genting HK's Manila unit drives 3Q growth

Resorts World Manila profits up by a whopping 61% QoQ.

Resorts World Manila (RWM) posted 3Q12 numbers that were in line with CIMB's expectations.  CIMB notes that It is a key driver to GENHK’s performance in
FY13 given the strong underlying growth in turnover flowing through to the bottomline as marketing and wage costs normalise.

Here's more from CIMB:

GENHK does not report quarterly results but quarterly numbers from Resorts World Manila (RWM) came via GENHK's local partner Alliance Global. 3Q12 trends from RWM were in line with our expectations.

EBITDA recorded the usual strong seasonal trend of 36% qoq growth to PHP2.7bn but rose only 2% on a yoy basis with expected marketing costs, salaries and rebates hitting the bottomline.

We are forecasting 0.7% growth in EBITDA for the full year.

On a net profit basis, RWM recorded growth of 61% qoq but a yoy decline of 16% to PHP1.6bn. 3Q11 was an exceptionally good period owing to the opening of new VIP facilities last year.

We are expecting FY12 net profit to end the year down 2%.

What We Think
The key underlying trend is that growth in betting turnover continues to be strong. 1H12 VIP roll and mass market drop were up 45% and 30%, respectively.

RWM’s exposure to the business remains well-balanced with 65% of revenue coming from the mass market. We expect FY13 to register 20% growth in EBITDA and 22% growth in core net profit as the high level of gaming turnover flow to the bottomline, i.e. marketing and wage costs are expected to normalise. FY13 will be the first year of operation under fully-completed facilities.

What You Should Do
GENHK is a proxy for the long-term structural growth of the Philippine gaming market. The second IR at Resorts World Bayshore, valued at
US$1.1bn, will begin construction next year and will be fully funded by RWM without the help of GENHK's balance sheet, which will move into
net cash position in FY13