Genting Singapore - RHB Invest 2019-02-15: Ride On Solid Visitor Growth; Keep BUY


Genting Singapore - Ride On Solid Visitor Growth; Keep BUY

  • We expect GENTING SINGAPORE LIMITED (SGX:G13) to report SGD184-201m in PATAMI for 4Q18 (-5 to -13% q-o-q, +23 to 34% y-o-y). It is trading at a relatively low 7.3x EV/EBITDA (regional peer average is 12.3x, 5-year historical mean is 10x), which we deem as unjustified.
  • Our call is made on the back of stable casino earnings, market share gains and the company’s potential to tap into the Japan market, bolstered by its net cash balance of SGD2.9bn.
  • Genting Singapore will announce its 4Q18 results on 21 Feb.
  • Reiterate BUY and Target Price of SGD1.23, 13% upside plus 3% FY19F yield. Refer to the PDF report attached for DCF valuation details. 

Marina Bay Sands’ (MBS) 4Q18 results.

  • MBS reported lower 4Q18 EBITDA of USD362m (-21% y-o-y), mainly on a lower rolling hold of 2.79% (vs 3.95% in 4Q17) and softer rolling volume (-13% y-o-y). This resulted in a decline in EBITDA margin to 50% (4Q17: 56%). We opine that the softer rolling volume could be due to heightened competition from neighbouring countries

Genting Singapore’s 4Q18 results preview.

  • Based on our estimates and indicators from MBS’ 4Q18 results, Genting Singapore could see double-digit growth y-o-y in rolling volume, on an overall gain in market share, which averaged 49% for 9M18 (vs 36% in FY17).
  • Assuming a market share of 47% (flat q-o-q) and normalised win rate in 4Q18, Genting Singapore’s FY18 EBITDA could come in within the range of SGD1.25-1.30bn, vs the Street estimate of SGD1.24bn.

FY18 double-digit growth intact.

  • With the growth in gaming volume coupled with lower bad debt and cost efficiencies, Resorts World Singapore (RWS) is on course to deliver double-digit growth in FY18 EBITDA and core PATAMI.
  • Moving forward, it could maintain its market share, in view of Genting Singapore’s focus to expand in the premium and VIP segments, with better credit facilities.

Tourist arrivals grew 6.2% YoY in FY18.

  • Tourist arrivals into Singapore hit a new high of 18.5m in FY18 (vs 17.4m in FY17), mainly driven by visitors from China (+6% y-o-y), Indonesia (+2%) and India (+13%) – owing to strong travel demand and better flight connectivity. Singapore also registered 6% growth in tourist spending on entertainment, sightseeing and gaming – which bodes well for Genting Singapore’s non-gaming divisions as well as its casino earnings.

Key risks.

  • Fluctuations in win rate, market share contraction and slowdown in tourist arrivals at RWS as the SGD strengthens against other currencies.

Singapore Research RHB Securities Research | 2019-02-15
SGX Stock Analyst Report BUY MAINTAIN BUY 1.230 SAME 1.230