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:
- its prior net revenues with the adoption of the ASC 606 accounting standard (revenue from contracts with customers), and
- its non-rolling drops to include chips purchased and exchanged at the cage.
- 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:
- higher DPS, and
- a win in Japan, which we have not incorporated into our forecasts.
- Risks are:
- lower adjusted EBITDA, and
- market share decline.
Cezzane SEE
CIMB Research
|
LIM Siew Khee
CIMB Research
|
http://research.itradecimb.com/
2018-04-26
SGX Stock
Analyst Report
1.400
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1.400
