GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - Pleasant Surprise From Dividend
- 4Q19 remains weak, luck-adj. EBITDA -12% q-o-q.
- Pleasant surprise from final dividend which implies ~4.5% annualised yield.
- Undemanding valuation and sustainable dividend yield likely offer support to share price.
Muted 4Q; slightly higher dividends.
- Genting Singapore (SGX:G13)’s EBITDA stayed largely flat q-o-q at SGD288mn on a reversing VIP hold rate (3.4% in 4Q vs 2.6% in 3Q). Adjusted for this, EBITDA fell 12% q-o-q to SGD260mn, versus Marina Bay Sands’ luck-adjusted EBITDA growth of +5% q-o-q in 4Q.
- Market share loss was also noted across its business segments. The market share of VIP rolling chips volume fell 4ppt q-o-q to 43% in 4Q, while mass-market GGR fell 2ppt q-o-q to 35%. However, the weak 4Q results was offset by the surprise increase in its final dividend of SGD0.025/share (2017 & 2018: SGD0.02/share) despite the challenging outlook.
- The management intends to maintain the dividend payout.
Potential recovery delayed to 2H20.
- At the date of report, Singapore has reported 50 coronavirus cases. Although management expects a low probability of a complete casino shutdown, the significant drop in visitation is likely to hurt its Q1 performance.
- We estimate that Chinese visitors contribute to about 30-40% of casinos’ revenue in Singapore, and it might take a few months for visitors to resume normal travel even if the outbreak stabilises. Accordingly, we expect the potential recovery to be delayed to 2H20.
Sluggish regional and market outlook.
- Accordingly, we lowered our FY20 earnings estimates by 19% to factor in the impact from the coronavirus. Recognising this is as a one-off event, we roll the valuation base to FY21 which we view as a year with more normalised earnings. We also trim our fair value to SGD1.00 (from SGD1.05).
- Trading currently at 6x FY21 EV/EBITDA, which is at the low-end among the regional players, the sluggish outlook appears to have already been priced in.
- We view management’s intention to maintain its dividend payout as a key positive.
- Holding a net cash of SGD0.29/share (post FY19 final dividend) and generating SGD0.09 operating cashflow/share, Genting Singapore is able to sustain the dividend of SGD0.04/share. Dividend yield of ~4.5% could offer support to its share price.
- See Genting Singapore Share Price; Genting Singapore Target Price; Genting Singapore Analyst Reports; Genting Singapore Dividend History; Genting Singapore Announcements; Genting Singapore Latest News.
OCBC Research Team
OCBC Investment Research
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https://www.iocbc.com/
2020-02-14
SGX Stock
Analyst Report
1.00
DOWN
1.050
