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Would Genting Singapore Be Affected by Its Sole Rival’s Change in Leadership?

Genting Singapore’s (SGX: G13) bread-and-butter is the tourism destination Resorts World Sentosa, located in Singapore’s Sentosa island (where else?). The integrated resort hosts a myriad of leisure facilities – like the Universal Studios Singapore theme park and S.E.A. Aquarium, for instance – but the main bulk of the company’s revenue still stems from the casino that’s found within.

Because of that, Genting Singapore’s main industry rival would be the U.S.-based Las Vegas Sands Corp (NYSE: LVS), the company behind Singapore’s only other casino that’s found in Marina Bay Sands.

Recently, Las Vegas Sands, or LVS for short, had announced that it’s looking for a successor for its current chief operating officer, Mike Leven. Leven’s the second in command at LVS behind chief executive Sheldon Adelson, who’s also the largest shareholder in the company.

At 80 years old now, Adelson has built LVS over the years into a global gaming company with nine casinos in total located in Las Vegas, Macau, Bethlehem, and Singapore. In Macau, which is one of the largest ‘casino cities’ in the world, LVS has a dominant presence.

With LVS undergoing a change in leadership, how might this affect Genting Singapore?

The gaming rivalry

Judging from current numbers, LVS is the slightly dominant player in the gaming market here in Singapore. It has also been gaining market share over the past year. In 2013, LVS’s Singapore-based casino revenue had grown by 4% to US$2.36 billion (approximately S$2.9 billion). Meanwhile, Genting Singapore’s gaming revenue had dropped by 7.6% to S$2.19 billion.

LVS’ succession planning

Leven’s contract is set to expire by this year’s end and LVS will begin a replacement search within the next few weeks. But while a change in the chief operating officer might be a big one for any company to handle, there’s at least solace in the fact that Adelson’s showing no signs of wanting to step down anytime soon.

With more than 50% of LVS being controlled by him and his family, it’s most likely that we’ll see Adelson continue to be the final decision maker in the company for the forseeable future.

What does it mean for Genting Singapore?

Since it’s likely that the gaming industry in Singapore will continue to be dominated by the two companies for the foreseeable future – the Casino Regulatory Authority in Singapore will not be granting more than two casino licenses (currently held by Genting Singapore and LVS) for the 10-year period starting from March 2007 – the succession issue at LVS might actually not be that important to Genting Singapore.

What’s more important here is growth around the region. This is because our local casino operators are not just competing amongst themselves; they’d also have to tussle with potential large-scale casino and tourism developments being built in other Asian countries. For instance, there has been a lot of recent focus on Japan and Korea as new destinations for casino/integrated resort development.

To minimise such threats, Genting Singapore itself is looking to diversify geographically and is currently co-developing a new integrated resort in Jeju Island, South Korea. The development is expected to be ready in 2017 and management has noted synergistic benefits that might accrue between the new development and Resorts World Sentosa.

If that works out well, it could be another growth engine for Genting Singapore and could be something for investors to look forward to.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Stanley Lim doesn’t own shares in any companies mentioned.