Genting Singapore - CIMB Research 2018-04-26: Marina Bay Sands 1Q18 Lower VIP Chip Could Be Boon For GENS

Genting Singapore - CIMB Research 2018-04-26: Marina Bay Sands 1Q18 Lower VIP Chip Could Be Boon For GENS GENTING SINGAPORE PLC G13.SI

Genting Singapore - Mbs 1q18 Lower Vip Chip Could Be Boon For Gens

  • Marina Bay Sands (MBS)’s 1Q18 adjusted EBITDA of US$541m (+48.6% y-o-y) was lifted by a higher VIP win-rate that buoyed VIP GGR, higher F&B takings and lower operating costs.
  • Lower MBS VIP volumes could imply higher market share for Genting Singapore (GENS), in our view.
  • We forecast Genting Singapore could report 1Q18 adjusted EBITDA of S$297.6m in the upcoming results release scheduled for 10 May. 
  • Maintain ADD and target price of S$1.40.



MBS 1Q18: held up by high VIP win rate

  • Marina Bay Sands (MBS) has revised the way it reports:
    1. its prior net revenues with the adoption of the ASC 606 accounting standard (revenue from contracts with customers), and
    2. its non-rolling drops to include chips purchased and exchanged at the cage.
    EBITDA figures were not affected.
  • Adjusted property EBITDA of US$541m was +18.6% q-o-q/+49% y-o-y in 1Q18, largely due to better VIP win-rate that buoyed VIP GGR, higher F&B takings and lower operating costs.
  • 1Q18 VIP GGR rose 57% y-o-y to US$352m (1Q17: US$225m), mainly due to all-time high rolling-chip win rate of 4.77% (vs. 4Q17/1Q17: 3.95%/2.5%) despite the sequential and yearly decline in rolling chip volumes (-7% q-o-q/ -17% y-o-y).
  • Mass GGR of US$428m was largely flat (vs. 4Q17/1Q17: US$427m/US$432m) subdued by lower non-rolling chip win percentage of 18.4% (vs. 1Q17:22.2%) despite higher slot GGR.


Lower MBS VIP volume supportive of higher market share for GENS

  • Genting Singapore (GENS) is scheduled to announce its 1Q18 results after market close on 10 May.
  • We estimate 1Q18 adjusted EBITDA was S$297.6m (+5% y-o-y, +17% q-o-q) on the back of higher FY17 average market share of 40% for both the VIP and mass markets (vs. average 37.1% VIP and 39.4% mass in FY17), and continued cost discipline (average trade receivable impairment at c.S$9.5m/quarter).
  • We note in 4Q17, whilst MBS saw VIP volumes falling, GENS’s estimated market share actually improved to 42% (vs. estimated average of c.35% in 9M17) due to GENS loosening credit terms for VIPs. 1Q18 was likely a repeat of the same trend, in our view.
  • A key focus during GENS’s results release will be its ability to improve market share and maintain EBITDA levels, providing investors comfort.
  • Further updates on the timeline for Japan casinos are also expected; the bill is still being actively debated in Japan.


Maintain ADD and target price of S$1.40

  • We maintain our ADD rating and target price, based on 11.5x FY19F EV/EBITDA (0.5 s.d. above the historical 5-year mean). Potential catalysts are:
    1. higher DPS, and
    2. a win in Japan, which we have not incorporated into our forecasts.
  • Risks are:
    1. lower adjusted EBITDA, and
    2. market share decline.





Cezzane SEE CIMB Research | LIM Siew Khee CIMB Research | http://research.itradecimb.com/ 2018-04-26
SGX Stock Analyst Report ADD Maintain ADD 1.400 Same 1.400



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