Genting Singapore - OCBC Investment 2019-11-12: Challenging Market Conditions

GENTING SINGAPORE LIMITED (SGX:G13) | SGinvestors.io GENTING SINGAPORE LIMITED (SGX:G13)

Genting Singapore - Challenging Market Conditions

  • Slight 3Q miss.
  • Mass-market could remain weak near term as players adapt to a higher casino entry levy.
  • Global market conditions remain challenging.



3Q19 adjusted EBITDA -13% y-o-y

  • Genting Singapore (SGX:G13)'s 3Q19 adjusted EBITDA -13% y-o-y to SGD278mn, which came in slightly below expectation on lower-than-normal luck at 2.6% (theoretical 2.85%). Adjusted for this, EBITDA dropped 7% y-o-y to USD295mn which is largely in-line with our estimate. See Genting Singapore Announcements.
  • The decline in mass-market GGR widened to -11% y-o-y in 3Q19 (2Q19: -6%) on full quarter impact of 50% increase in casino entry levy effective from April. This has been offset by a lower bad debt provision of SGD25mn (2Q19: SGD47mn) but this may stay higher than historical average level amid management’s more conservative stance on credit policy.


Sluggish GGR momentum may persist.

  • In 3Q19, market share of rolling chips volume remained steady at 47%. With the challenging macro environment, especially with the on-going US-China trade tensions, this could also impact the outlook for the VIP segment.
  • We expect the mass-market segment to remain weak near term as players may take a few quarters to adjust to the higher casino levy which was implemented in April 2019. We forecast the mass-market GGR to drop 8% y-o-y in 4Q19E and -3% in 2020E (from previous -1%).
  • For VIP, we forecast VIP rolling chips volume to grow 5% y-o-y in 4Q19 and stay flat in 2020E.
  • Incorporating a more conservative GGR growth assumption for 2020E, we trimmed FY19/20E earnings estimate by 3%/2% and cut price target to SGD1.05 (from SGD1.10). See Genting Singapore Share Price; Genting Singapore Target Price.





OCBC Research Team OCBC Investment Research | https://www.iocbc.com/ 2019-11-12
SGX Stock Analyst Report BUY MAINTAIN BUY 1.05 DOWN 1.10



Advertisement



MOST TALKED ABOUT STOCKS / REITS OF THE WEEK



loading.......



ANALYSTS SAY


loading.......