Genting Singapore - CGS-CIMB Research 2020-11-16: 3Q20 A Strong Suit; Likely Better Times Ahead


Genting Singapore - 3Q20 A Strong Suit; Likely Better Times Ahead

  • Genting Singapore's 9M20 adjusted EBITDA of S$215.7m beat our and consensus FY20F forecasts of S$108m and S$115.3m, respectively, on higher-than-expected 3Q EBITDA.
  • 3Q20 adjusted EBITDA of S$149m, although down 46.4% y-o-y, was significantly above our expectations of a slight EBITDA loss.
  • We remain positive. Reiterate ADD on Genting Singapore, with a higher Target Price of S$0.86, still based on 8.5x (close to 0.5 s.d. below mean) but rolled over to CY22F EV/EBITDA.

Stellar 3Q20 revenue for Genting Singapore…

  • Genting Singapore (SGX:G13)'s 3Q20 revenue of S$301m (-49.5% y-o-y) was a significant sequential improvement from 2Q20’s revenue of S$41.3m.
  • While we had forecast some increase in gaming revenues as casinos have been allowed to open since 1 July, the higher gaming revenues of S$212.9m (vs. 2Q20’s S$6.5m) took us by surprise by being close to 1Q20’s gaming revenue of S$267.9m.
  • Genting Singapore's 9M20 revenue of S$749.2m (-c.60% y-o-y) was ahead at c.89% of our FY20F forecast of S$840m.

… with an equally robust 3Q20 adjusted EBITDA margin

  • Genting Singapore's 3Q20 adjusted EBITDA of S$149m was strong sequentially (vs. 2Q20’s loss of S$84.9m), with 3Q20 adjusted EBITDA margin of 49.5%. We suspect this was due to the significant cost containments and potentially higher-margin mass gaming business in this quarter.
  • 3Q20 adjusted EBITDA took 9M20 adjusted EBITDA to S$215m (-76.1% y-o-y), exceeding our FY20F adjusted EBITDA forecast of S$108m.

Likely better times ahead

  • Genting Singapore's prospects could improve further in 4Q20F with Singapore gradually re-opening and the government advocating local tourism. We expect Genting Singapore to report 4Q20F revenue of at least S$307.4m (as pent-up demand could have lifted 3Q20’s gaming revenue, we pencil in a 10% q-o-q discount to 4Q20’s gaming revenues; we also expect non-gaming revenue to fall 60% y-o-y in 4Q20F).
  • We forecast an adj. EBITDA margin of 45%, which takes our 4Q20F adj. EBITDA to c.S$138m. Hence, we lift our FY20F adj. EBITDA to S$354m (vs. S$108m previously), and our FY20F core net profit to S$88m (up + > 100% from previous estimates). Our FY21-22F adj. EBITDA and net profit assumptions are relatively unchanged.

Reiterate ADD on Genting Singapore

Cezzane SEE CGS-CIMB Research | https://www.cgs-cimb.com 2020-11-16
SGX Stock Analyst Report ADD MAINTAIN ADD 0.86 UP 0.730