GENTING SINGAPORE LIMITED (SGX:G13)
Genting Singapore - Waiting For Borders To Reopen
- Genting Singapore's 1H21 adjusted EBITDA of S$276m fell short at 39%/44% of our/consensus full-year estimates with similar operating conditions throughout the period.
- Expected q-o-q improvement in revenues did not happen as tourists’ contribution remains hammered by border closures.
- We remain optimistic on more concrete reopening plans and reiterate ADD on Genting Singapore with a lower target price of S$0.95 at 9.5x (5-year average) FY22F EV/EBITDA.
Lack of tourists hurt footfall at GENS' attractions
- Tourists typically contributed up to 80% of footfall at Genting Singapore (SGX:G13)’ attractions pre-COVID-19. However, with persistent border closures, weak non-gaming revenue led to poor 1H21 revenues at 34%/37% of our/consensus estimates.
- Reversal of reopening plans by the government in May to control an emergence of COVID-19 cases worsened the situation in 2Q21 as a result of stricter capacity restrictions and shorter operating hours. However, as the COVID-19 vaccination rate of the local population crossed 70% in Aug, the government has since laid out plans for an economic and border reopening, which could see the nation start welcoming tourists again sooner rather than later.
Genting Singapore is gaining gaming market share
- In 1H21, Genting Singapore's gross gaming revenue (GGR) market share rose to a COVID-19 cluster in May.
Edging closer to Yokohama IR bid
- The results of the Yokohama Request for Proposal (RFP) is likely to be announced within the next month with GENS as one of the last two remaining candidates alongside Melco Resorts (MLCO US). However, the city could withdraw its bid as one of the three potential IR destinations in Japan due to the field of candidates running on an anti-IR platform in the upcoming mayoral election on 22 Aug.
- Nevertheless, assuming a positive outcome from Genting Singapore’ Yokohama’s IR ambitions, we had estimated a potential share price contribution of S$0.23/share. We have yet to include the potential contribution to our target price due to the binary nature of the upcoming mayoral elections.
Recovery not off the table, just delayed
- This report marks a change in downwards by 8.9%-33.1% for FY21F-FY23F.
- Reiterate ADD on Genting Singapore with a lower target price of S$0.95 at 9.5x FY22F EV/EBITDA.
- See
- Upside risks include a swifter return of tourists and successful Yokohama IR bid.
- Downside risks include delayed border reopening plans.
TAY Wee Kuang
CGS-CIMB Research
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https://www.cgs-cimb.com
2021-08-13
SGX Stock
Analyst Report
0.95
DOWN
1.000
