Genting Singapore has reported its first quarterly loss in five years, and its shares are plumbing new lows. Should investors bet on a recovery?

It is two o’clock on a Saturday afternoon and the casino at Resorts World Sentosa (RWS) is humming with activity. The baccarat tables seem to be especially popular, while the Money Wheel is attracting as many spectators as players. Among the punters milling about is a retiree from Penang, Malaysia. A regular visitor to RWS, she says she usually comes for about a month at a time. Luck hasn’t been on her side on this particular visit, though. “Not so good,” she says. “I’ve lost money.”

Genting Singapore, owner and operator of RWS, relies on patrons of its casino being unlucky. Yet, over the past couple of years, it is the company that seems to have been on a losing streak. For one thing, the usual throng of Chinese, Malaysian and Indonesian gamblers appears to have dwindled, says the visitor from Penang. Indeed, many slot machines are idle that afternoon, and a good number of smartly dressed dealers sit at empty tables awaiting players.

For 2QFY2015, the company reported a loss of $16.9 million, its first quarterly loss since 4QFY2010. For 2QFY2014, it had reported earnings of $102.3 million. The poor showing was largely attributed to a fair-value loss of $95 million on derivative financial instruments. The company also recorded unrealised foreign exchange losses of $84.05 million. But business has been slow too. Revenue contracted 23% y-o-y in the quarter to $578.1 million. While mass gross gaming revenue (GGR) inched up 2% from a year ago, this was not enough to make up for a 36% decline in VIP rolling volume.

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