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Genting Singapore Declares an Interim Dividend of S$0.01: 5 Highlights from the Casino Operator’s Latest Earnings

·5-min read
Resorts World Sentosa
Resorts World Sentosa

Border reopening and the easing of restrictions are breathing life into a wide swath of industries.

The aviation industry is seeing clearer skies ahead as more people hop onto aeroplanes for business trips and vacations.

Singapore Airlines Limited (SGX: C6L) recently reported its second-highest operating profit in its history even as passenger numbers exceeded the two million mark for July.

Airline caterer and ground handler SATS Ltd (SGX: S58) also reported a more than tripling of flights handled year on year with cargo tonnage surging by 53.2% year on year for its latest business update.

Amid the good news, another beneficiary of rising tourism numbers is Genting Singapore Limited (SGX: G13).

The operator of the integrated resort (IR) on Sentosa, Resorts World Sentosa (RWS), reported its fiscal 2022 first half (1H2022) earnings recently.

Here are five highlights that investors should take note of.

1. A stronger set of financials

Revenue for Genting Singapore rose 20% year on year to S$663.1 million for 1H2022.

The increase in revenue was broad-based, with the gaming side reporting a 7% year on year increase to S$475.2 million and the non-gaming division seeing a 65% year on year revenue surge to S$183 million.

The lifting of COVID-19 restrictions boosted the group’s operating capacity which saw an increased number of tourists and locals visiting the IR’s attractions.

Operating profit fell by 9% year on year to S$110.2 million principally due to an impairment loss of S$23.3 million booked in 1H2022 as well as fair value losses on financial assets amounting to nearly S$4 million.

Excluding these items, operating profit would have risen by 13.6% year on year to S$137.5 million.

Net profit dipped by 4% year on year due to the aforementioned two exceptional items but would have been 26.6% higher year on year if they were excluded.

2. Sturdy balance sheet and healthy free cash flow

Genting Singapore possesses a strong balance sheet with minimal debt.

The cash balance stood at S$3.3 billion as of 30 June while total debt came up to S$213.9 million.

The group also generated higher levels of operating cash flow of S$249.5 million compared with S$194.4 million in the same period last year.

After deducting capital expenditure, the IR operator generated S$123.9 million of free cash flow for 1H2022, a sharp reversal from the negative free cash flow for 1H2021.

3. Non-gaming division set to do better

The non-gaming division saw a sharp recovery in revenue for 1H2022, but there may be more to come.

The lifting of COVID-19 measures has supported the recovery of the meetings, incentives, conferences and exhibitions (MICE) sector while also boosting the number of social events.

For 2H2022, Genting Singapore reported that over 50 key conferences and corporate meetings involving more than 100,000 local and international delegates have been confirmed.

One-third of these are large-scale events, some examples of which include the World Ocean Summit Asia Pacific and the Singapore International Bunkering Conference and Exhibition.

With the increase in the number of such events and the further recovery of the MICE sector, RWS should enjoy higher non-gaming revenue as more tourists stay at its hotels and dine at its food and beverage outlets.

4. RWS 2.0 coming up

There is good news for the revamp of RWS to prepare it for its next phase of growth.

The tender award for the Singapore Oceanarium is targeted for this quarter with the opening of this new attraction slated for the fourth quarter of 2024.

Once completed, it will be three times larger than the current S.E.A. Aquarium that will include learning labs and collaborative workspaces.

RWS has also broken ground for “Minion Land” in May as part of Universal Studios Singapore’s major expansion programme.

Other refurbishment projects include the remaking of Festive Hotel into a business cum leisure hotel and also a workation (work plus vacation) hotel.

Upgrading of the Resorts World Convention Centre and the introduction of three new dining concepts will also commence before this year’s end.

5. An interim dividend has been declared

Genting Singapore has declared an interim dividend of S$0.01 per share in line with the improved results.

In contrast, there was no interim dividend declared last year.

Together with the S$0.01 final dividend paid out for FY2021, the trailing 12-month dividend stands at S$0.02, giving Genting Singapore’s shares a trailing dividend yield of 2.5%.

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Disclaimer: Royston Yang does not own shares in any of the companies mentioned.

The post Genting Singapore Declares an Interim Dividend of S$0.01: 5 Highlights from the Casino Operator’s Latest Earnings appeared first on The Smart Investor.