Genting Singapore - OCBC Investment 2021-02-10: Sequential Improvement

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GENTING SINGAPORE LIMITED (SGX:G13)

Genting Singapore - Sequential Improvement

• Genting Singapore's 2H20/ FY20 adjusted EBITDA dropped 36%/ 64% y-o-y.
• Recovery driven by local demand.
• Construction of RWS 2.0 is likely to commence in early 2022.

Genting Singapore's 2H20 results above expectations on net reversal of S$23m of impairment charge

• Genting Singapore (SGX:G13)’s 2H20 results were above expectations. Revenue and net profit dropped 49% y-o-y and 41% y-o-y to S$615.5m and S$185.9m, pulled down by a 43% y-o-y decline in gaming revenue and a 68% y-o-y decrease in non-gaming revenue. 2H20 adjusted EBITDA dropped 36% y-o-y to S$360.4m, which we consider above expectations, thanks to a net reversal of S$23m of impairment charge which was mainly related to a reversal of bad debt and bonus.
• A full-year dividend of S$0.01 per share was declared by Genting Singapore as compared to S$0.04 per share by in FY19.

Timeline of RWS 2.0 impacted by COVID-19 but on track

• Genting Singapore's management shared that RWS 2.0 was delayed due to the impact of COVID-19, e.g. shortage of labour, higher material costs and revision of design works of RWS 2.0 in order to incorporate health and safety measures in the post-pandemic environment. Construction is likely to commence in early 2022.

2H20 gaming/non-gaming revenue improved 42%/0.3% q-o-q

• While Genting Singapore’s performance continued to face headwinds from COVID-19 in 2H20, there was q-o-q improvement driven by local demand. Revenue rose 4% q-o-q, mainly contributed by a 42% q-o-q improvement in non-gaming segment while gaming segment remained largely flat (+0.3% q-o-q), thanks to pent-up demand from local visitors and support from government to boost local tourism.
• We continue to see Genting Singapore as a beneficiary of the rollout of vaccines and a gradual easing of social distancing and travel restrictions. However, we believe that demand will be largely driven by local demand in FY21 as it takes time for global rollout of vaccines and opening of international borders.

Maintain BUY

• After adjustments, our fair value estimate for Genting Singapore increases from S$0.96 to S$1.02 which is based on 8.5x FY22F 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 | https://www.iocbc.com/ 2021-02-10

SGX Stock Analyst Report BUY MAINTAIN BUY 1.02 UP 0.960