Genting Singapore - Maybank Kim Eng 2020-03-26: Receives A Major Lifeline

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

Genting Singapore - Receives A Major Lifeline


Maintain BUY and SGD0.84 Price Target

  • Resort World Sentosa (RWS) will receive property tax rebates and be paid wage setoffs. We estimate that Genting Singapore (SGX:G13) stands to save SGD83m-SGD203m in FY20. These account for a very helpful 22%-54% of our FY20 earnings estimates which were lowered recently - see report Genting Singapore - Maybank Kim Eng 2020-03-18: This Too Shall Pass, to impute weak revenue due to the COVID-19 pandemic.
  • Our earnings estimates, BUY call and SGD0.84 EV/EBITDA based Target Price are unchanged for now.
  • We continue to like Genting Singapore for its high dividend yields (6.5% p.a.) and cheap valuations (0.9x FY20E P/BV).



To receive property tax rebates and wage setoffs

  • Today, Deputy Prime Minister of Singapore Heng Swee Keat delivered a ‘Resilience Budget’ to aid those affected by the COVID-19 pandemic. Two measures impact RWS -
    1. property tax rebate for integrated resorts will be raised to 60% from 10%; and
    2. Government Of Singapore will pay companies 25% (general) or 75% (tourism) of monthly wages for every local worker capped at SGD4.6k each for 9 months till end-2020.
  • We estimate the 60% property tax rebate will save Genting Singapore SGD22.9m in FY20.


Treatment of wage set off unclear at this juncture



FY20 cost savings will be substantial, nonetheless

  • Assuming Genting Singapore receives the minimum 25% wage set off for ~70% of its ~13k employees, we estimate this will save Genting Singapore SGD60m in FY20. Coupled with the 60% property tax rebate, the total cost savings of ~SGD83m is a punchy 22% of our FY20 core net profit forecast.
  • Assuming Genting Singapore receives the maximum 75% wage set off for ~70% of its ~13k employees, we estimate that this will save Genting Singapore a whopping SGD180m in FY20. Coupled with the 60% property tax rebate, the total cost savings of ~SGD203m is a whopping 54% of our FY20 core net profit forecast.





Yin Shao Yang Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-03-26
SGX Stock Analyst Report BUY MAINTAIN BUY 0.840 SAME 0.840



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