GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - Strong Recovery, Positive Sentiment Boost
- Stronger-than-expected recovery.
- Genting Singapore's EBITDA and net profit back in the black in 3Q.
- Higher fair value estimate of S$0.96.
Genting Singapore's 3Q20 performance beat expectations
- Genting Singapore (SGX:G13)’s provided its 3Q20 business update. Revenue fell 50% y-o-y to S$301.0m, but improved over 100% on a q-o-q basis, driven by a strong recovery across all key business segments (3180% q-o-q for gaming, 269% q-o-q for non-gaming and 52% for others).
- Despite travel restrictions and capacity constraints, Genting Singapore's 3Q20 adjusted EBITDA swung back into a profit of S$149.0m (-46% y-o-y) from a loss of S$84.9m in 2Q. The performance came in above ours and Bloomberg consensus’ expectations on better-than-expected recovery trajectory.
- Genting Singapore's net profit also turned from a loss of S$163.3m in 2Q to a profit of S$54.4m in 3Q20.
Strong pent-up local demand
- With a lack of contribution from international travellers due to border controls and travel restrictions, the strong recovery in gaming and non-gaming segments could be due to pent-up demand from local traffic in 3Q20.
- Recall that Universal Studios Singapore, S.E.A. Aquarium and RWS casino reopened from 1 July 2020 with all necessary safe management measures in place. RWS casino currently only opens to existing members and those who have paid the annual levy.
Benefit from vaccine development and potential easing of social distancing measures
- With a more stabilised infection rate in Singapore, Genting Singapore could benefit from potential easing of social distancing measures as Singapore enters Phase 3 and support from government on domestic tourism. Pfizer’s announcement of favourable phase 3 data on its COVID-19 vaccine is positive to Genting Singapore, and this was reflected in the strong rebound of Genting Singapore share price. The announcement from Moderna on its 95% effective COVID-19 vaccine could further grow the confidence and drive the recovery.
- We revise our Genting Singapore's FY20/21F EBITDA forecasts by 400%/59% on better outlook and sentiment. Our fair value hence increases from S$0.68 to S$0.96 which is based on 8.5x FY21F EV/EBITDA.
- See Genting Singapore Share Price; Genting Singapore Target Price; Genting Singapore Analyst Reports; Genting Singapore Dividend History; Genting Singapore Announcements; Genting Singapore Latest News.
Chu Peng
OCBC Investment Research
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https://www.iocbc.com/
2020-11-17
SGX Stock
Analyst Report
0.96
UP
0.680
