GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - Phase 3 Re-Opening ~ Journey Of Recovery Begins With This Step
Upgrade to BUY with higher target price of S$0.95 (+22%)
- Phase 3 of Singapore’s reopening will begin on 28 Dec 2020. In addition, the Pfizer-BioNTech vaccine will arrive soon and Singapore will gradually reopen its borders.
- Our earnings estimates for Genting Singapore (SGX:G13) are unchanged but we lower our WACC from 14.5% to 11.8% as we revert to the five year mean beta of 1.2x (1.5x previously) and roll forward our valuation base year from end-FY20E to end-FY21E to derive a revised DCF-based target price of S$0.95 (from S$0.78).
- Upgrade Genting Singapore to BUY (from HOLD).
Phase 3 reopening positive for Genting Singapore
- Among the easing measures, attractions (which include integrated resorts) will be allowed to increase operating capacity to 65% from 50%. Genting Singapore’s 3Q20 earnings outperformance was largely based on 25% operating capacity (see previous report: Genting Singapore - Maybank Kim Eng 2020-11-15: Not Every Day That It Outshines Marina Bay Sands).
- Attractions were allowed to increase operating capacity to 50% from 25% from 18 Sep 2020 onwards. RWS casino was also open to all guests from 9 Oct 2020 onwards (previously only to Genting Rewards members). Thus, Genting Singapore's 4Q20 earnings ought to be better q-o-q.
Other developments also sending out positive vibes
- The first batch of the Pfizer-BioNTech vaccine will arrive by year end. Singapore aims to vaccinate its entire population by end-2021. This will instil confidence in Singaporeans to visit RWS again. We gather that they accounted for ~20%/~50% of pre-COVID-19 VIP/mass market GGR.
- Prime Minister Lee also stated that Singapore will gradually reopen its borders. This is important as we gather that Chinese, Malaysians and Indonesians accounted for ~80%/~50% of Genting Singapore's pre-COVID-19 VIP/mass market GGR.
Increasingly confident of our earnings estimates
- Our Genting Singapore's FY21E/FY22E earnings estimates are unchanged as they are based on VIP and mass market GGR recovering to 50%/75% and 75%/100% of pre- COVID-19 levels. That said, we lower our WACC from 14.5% to 11.8% as we revert to the five year mean beta of 1.2x (1.5x previously) as we are increasingly confident of our earnings estimates; we also roll forward our valuation base year from end-FY20E to end-FY21E to derive a revised DCF-based target price of S$0.95.
- 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/
2020-12-15
SGX Stock
Analyst Report
0.95
UP
0.780
