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
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https://www.iocbc.com/
2019-11-12
SGX Stock
Analyst Report
1.05
DOWN
1.10
