GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - Could Not Emulate Marina Bay Sands’ Sterling 4Q20 Results
Downgrade to HOLD with lower target price of S$0.92 (-3%)
- Genting Singapore (SGX:G13)'s 2H20/FY20 earnings and dividends outperformed our expectations. That said, the outperformance was largely due to non-recurring items.
- Unfortunately, Resorts World Sentosa (RWS) could not emulate Marina Bay Sands’ (MBS) in growing gaming revenue in tandem with the lifting of operating capacity limits.
- Our earnings estimates are little changed for now. We also trim our DCF-based target price by 3% to S$0.92 on minor housekeeping. With < 10% upside potential, we downgrade Genting Singapore to HOLD.
Earnings and dividends beat our expectations…
- Genting Singapore's 2H20 core net profit of S$186.9m brought FY20 core net profit to S$123.6m, which was above our expectation of S$86.9m. Final dividend of S$0.01 was also above our expectations as we were not expecting any. That said, Genting Singapore's FY20 revenue of S$1.1b was within our expectations at 100% of our full year estimate.
- The earnings outperformance was largely due to FY20 reversal of impairment on trade receivables of S$22.8m (MKE forecast: -S$68.7m) and reversal of bonuses which Genting Singapore did not quantify.
… but underlying operations could have been better
- Resorts World Sentosa (RWS) was allowed to increase operating capacity from 25% to 50% from 18 Sep 2020 and admit all guests from 9 Oct 2020 (members only before) but 4Q20 gaming revenue was flat q-o-q. In contrast, Marina Bay Sands (MBS)’s 4Q20 gross gaming revenue (GGR) grew 12% q-o-q in USD terms. See previous report: Genting Singapore - Maybank Kim Eng 2021-01-28: Really Good Vibes From Marina Bay Sands' 4Q20 Results. This implies RWS ceded GGR share in 4Q20 (2H20: 46%).
- RWS was allowed to increase operating capacity from 50% to 65% from 28 Dec 2020 but Genting Singapore still does not expect its GGR to improve markedly on lack of foreign gamblers.
EPS estimates relatively unchanged for now
- Furthermore, Genting Singapore also does not expect China cracking down on anyone enticing Mainland Chinese to gamble overseas (see report). Our FY21E/FY22E earnings per share estimates are little changed at +0%/+1% for now.
- See Genting Singapore Share Price; Genting Singapore Target Price; Genting Singapore Analyst Reports; Genting Singapore Dividend History; Genting Singapore Announcements; Genting Singapore Latest News.
- We introduce our FY23E EPS which implies easing of 6% y-o-y due to full year impact of the 3ppt gaming tax hike that will take effect on Mar 2022. After some housekeeping, we also trim our DCF-based target price for Genting Singapore by 3% to S$0.92.
Yin Shao Yang
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2021-02-10
SGX Stock
Analyst Report
0.92
DOWN
0.950
