Genting Singapore - Maybank Kim Eng 2021-08-13: Decent 1H21 But All Eyes Are On Yokohama


Genting Singapore - Decent 1H21 But All Eyes Are On Yokohama

Maintain BUY call and S$1.16 DCF-based target price

  • Genting Singapore (SGX:G13)'s 1H21 results exceeded our expectations but largely due to items which we opine are non-recurring in nature.
  • Investors’ focus will be on Genting Singapore’s bid for a Yokohama IR license. We assume status quo for the 22 Aug 2021 Yokohama mayoral election (i.e. pro-IR mayor remains) and Genting Singapore-Sega Sammy will win the Yokohama IR RFP process. In our view, there is little downside risk as we gather that the market has not imputed any upside potential from a Yokohama IR (MKE estimate: S$0.30/shr).

Genting Singapore's 1H21 results outperformed our expectations

  • Genting Singapore's 1H21 core net profit of S$111.5m was above our expectations at 65% of our FY estimate. Yet, 1H21 revenue of S$554.8m was within our expectations at 49% of our FY estimate. Outperformance of the former was due to:
    1. Job Support Scheme grant of S$34.8m (MKE estimate: nil); and
    2. bad debts written back of S$24.7m (MKE estimate: bad debts provided of S$7.0m).
  • No dividend was declared by Genting Singapore but this was within our expectations. We expect a final dividend of S$0.01 from Genting Singapore in 2H21.

Gaming operations appear stable h-o-h

  • We estimate that RWS 1H21 VIP volume was flat h-o-h at S$4.2b and RWS 1H21 mass market gross gaming revenue was also flattish h-o-h at ~S$485m. This was despite the operating capacity limit of RWS being reduced from 65% to 50% on 4 May 2021 and from 50% to 25% on 16 May 2021. The only thing working against RWS was luck factor. RWS 1H21 VIP win rate of 3.4% was ~40bps lower h-o-h. Thus, we conservatively leave our earnings estimates unchanged for now.

Outlook stable with a slight positive bias

Yin Shao Yang Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-08-13
SGX Stock Analyst Report BUY MAINTAIN BUY 1.160 SAME 1.160