GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - There Will Be A Spring After This Winter
Upgrade to BUY – Maintain SGD0.99 EV/EBITDA-based TP
- Genting Singapore (SGX:G13)'s 4Q19 earnings/dividends were within/above our expectations. The Covid-19 outbreak will have a negative impact on earnings but we expect it to be short lived.
- We cut our FY20 EPS by 12% but leave our FY21 EPS little changed and raise our DPS estimate to 4.0cents p.a. At near trough valuations coupled with > 4.5% dividend yield p.a., we gather that downside risk to share price is limited.
- The 2020 Budget and award of Japanese integrated resort licenses may also be potential catalysts.
Earnings in-line but dividends pleasantly surprised
- Genting Singapore's 4Q19 core net profit of SGD176m (+16% y-o-y, +13% q-o-q) brought 2019 core net profit to SGD705.1m (-8% y-o-y), which was within our expectation at 102% of our FY estimate. See Genting Singapore Announcements.
- 2019 EBITDA of SGD1.2b (-3% y-o-y) was also in-line with our expectations at 100% of our FY estimate. That said, the final DPS of 2.5cents brought 2019 total DPS to 4.0cents which was 0.5cent more than we expected.
- As per management guidance, we raise our annual DPS estimates to 4.0cents from 3.5cents. See Genting Singapore Dividend History.
Cut FY20 EPS by 12%; long term EPS little changed
- We expect 1Q20 to be poor due to the Covid-19 outbreak which caused:
- Singapore to bar Chinese visitors from 1 Feb 2020; and
- fewer locals to visit RWS.
- We cut our FY20 EPS estimate by 12% as we cut our FY20 VIP and mass market GGR growth y-o-y by 9-10ppts but our FY21 EPS estimate is little changed (see Fig11 in attached PDF report).
- As new Covid-19 deaths and cases are subsiding (Fig15-16), we believe the negative impact to RWS will not last beyond 2Q20. We also introduce FY22 EPS (+2% y-o-y).
Catalysts ahead with little downside to valuations
- Moreover, there may be long term earnings upside if the 2020 Budget (18 Feb 2020) yields aid and relief for RWS. Recall also that Genting Singapore is bidding for an integrated resort license in Japan. As winners are expected to be announced in 2H20, more upside could be derived soon if Genting Singapore wins a bid.
- With 12M forward P/BV at 1.3x or only 0.1x above its trough in Jan 2016, we opine that downside risk to Genting Singapore's share price is limited (see page 4 & 5 of attached PDF report). Dividend yields are also high at > 4.5% p.a.
- See Genting Singapore Share Price; Genting Singapore Target Price; Genting Singapore Analyst Reports; Genting Singapore Dividend History; Genting Singapore Announcements; Genting Singapore Latest News.
Yin Shao Yang
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2020-02-13
SGX Stock
Analyst Report
0.990
SAME
0.990
