GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - Taking Time To Get Back On Its Feet
- Genting Singapore's 1Q21 adjusted EBITDA of S$128.1m missed, at 16.3%/17.8% of our/consensus’ FY21F forecasts, on lower-than-expected margins.
- We suspect the lower margins were due to higher operational costs and government support tapering off. We lower our FY21-23F forecasts.
- Despite potential slower pick-up in business momentum, we still like Genting Singapore for its cash pile. Reiterate ADD with a lower target price (9.5x FY22F EV/EBITDA).
Genting Singapore's 1Q21 revenue growth within expectations…
- Genting Singapore (SGX:G13)’s 1Q21 revenue of ~S$278m fell 32% y-o-y/12% q-o-q, as expected. The y-o-y drop was due to a higher base as Singapore has been impacted by the COVID-19 outbreak since Feb 20. On a sequential basis, we think the large revenue drop was due to the high base of 4Q20 non-gaming revenue, which was largely boosted by pent-up demand for year-end holidays/ staycations/ attraction visits. Gaming revenue was stable on a sequential basis (+2% q-o-q).
… however, adjusted EBITDA margins were weaker
- Genting Singapore's 1Q21 adjusted EBITDA of S$128m indicated margins of 32%, down from elevated levels of 67% in 4Q20. We believe the fall in margins could be due to:
- tapering government support, such as the Job Support Scheme (JSS);
- a rise in operational costs as Resorts World Sentosa (RWS) developed creative events for promotions for domestic tourists; and
- the lack of provision reversals that were partly taken in 4Q20.
Taking some margins off the table, lower FY21-23F adjusted EBITDA forecast
- While upcoming revenues could be aided by RWS’s continued development of attractions (i.e. Genting Singapore has obtained a temporary occupation permit for the remodeled Resorts World Theatre for a new experiential dining attraction, Once a Pirate, and will be embarking on show production and performer recruitment) and redemption of SingapoRediscovers Vouchers that have been extended from end-Jun 21 to Dec 21, we nonetheless turn more conservative on adjusted EBITDA margins as costs continue to ramp up and government grants taper off. Thus, we trim our EBITDA margins for FY21-23F which leads to FY21-23F adjusted EBITDA falling by 4-9.4%.
Reiterate ADD on Genting Singapore.
- Genting Singapore’s further recovery relies on Singapore’s borders reopening, but we still like it for its strong balance sheet (end-FY20 net cash position of S$3.7bn), which will help tide it over the current tough times.
- We reiterate our ADD call, with a lower target price of S$1.00 (from S$1.05), still based on 9.5x CY22F EV/EBITDA (close to FY12-20 mean).
- See
- Potential re-rating catalysts include a quicker recovery in Singapore tourism.
- Downside risks are vice-ersa.
LIM Siew Khee
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-05-08
SGX Stock
Analyst Report
1.00
DOWN
1.050
