Genting Singapore - CIMB Research 2017-10-26: Sustained VIP Chip Growth At MBS Positive For GENS

Genting Singapore - CIMB Research 2017-10-26: Sustained VIP Chip Growth At MBS Positive For GENS GENTING SINGAPORE PLC G13.SI

Genting Singapore - Sustained VIP Chip Growth At MBS Positive For GENS

  • Marina Bay Sands (MBS)’s 3Q17 adjusted EBITDA of US$442m (+13% yoy) was lifted by a higher rolling win rate and VIP volumes, which maintained the yoy growth trend seen in 2Q17.
  • Overall sustained return in VIP volumes to Singapore is positive for the industry and Genting Singapore (GENS).
  • We expect GENS to report 3Q17 adjusted EBITDA of S$285.1m in the upcoming 3Q17 results release scheduled for 6 Nov. Maintain Add and target price of S$1.35.



MBS 3Q17: volume growth sustained for VIP segment

  • MBS reported an adjusted-property EBITDA of US$442m (-10% qoq/+13% yoy), rolling chip volume of US$9.4bn (+8% qoq/+30% yoy), non-rolling chip volume of US$943m (+4% qoq/-4% yoy) and slot handle takings of US$3.7bn (+6% qoq/+7% qoq). These figures will be higher in S$ terms.
  • 3Q17 VIP GGR rose 32% yoy to US$311m (3Q16: US$236m), lifted by a higher rolling-chip win rate of 3.29% (vs. 3Q16’s 3.25%), albeit lower than 2Q17’s 4.42%.
  • Noteworthy were rolling chip volumes that maintained the yoy growth trend seen in 2Q17 following sequential yoy declines in 1Q16-1Q17. MBS reiterated its strong commitment to cost controls, which helped to enhance profitability and margins.
  • Mass GGR of US$421m dipped slightly on a yoy basis (vs. 3Q16: US$439m) on a lower yoy non-rolling chip drop and win percentage.


Growth in VIP segment supportive of GENS 3Q17 results

  • Genting Singapore (GENS) is scheduled to announce its 3Q17 results after working hours on 6 Nov.
  • We estimate 3Q17 adjusted EBITDA was S$285.1m on the back of yoy uplift in VIP and mass GGR and GENS’s strong cost control efforts.
  • MBS’s sustained VIP rolling chip yoy growth implies that the return in VIP volumes to Singapore was sustained, supporting our VIP volume growth thesis for GENS.
  • A key focus during the GENS results release will be its ability to maintain market share, especially in the mass market space; and its efforts to keep the low VIP discounts and rebates that led to improved GGR in 2Q17.
  • Further updates on the timeline for Japan casinos is also expected given Japan held its snap election on 22 Oct. GENS recently announced the issuance of a JPY20bn (S$240m) yen-denominated bond, which speaks to its Japan investment dreams.


Maintain Add and target price of S$1.35

  • We maintain our Add rating and target price, based on 12x FY18F EV/EBITDA (slightly above its 6-year mean of 11.3x). 
  • Potential re-rating catalysts are higher-than-expected margins and better gaming revenues. 
  • Downside risks are a fall in gaming revenues, higher trade receivable provisions and failure to secure any Japan opportunities.




Cezzane SEE CIMB Research | LIM Siew Khee CIMB Research | http://research.itradecimb.com/ 2017-10-26
CIMB Research SGX Stock Analyst Report ADD Maintain ADD 1.350 Same 1.350



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