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Genting still has enough cash to fund Japan IR
It has a 40% net cash backing.
Genting Singapore (GENS)'s strong balance sheet is providing the firm with financial muscle to invest in a Japanese integrated resort should legislation be passed to legalise casinos in November, said DBS Vickers Securities.
The research house added that even if it considers capital management initiatives of higher dividends, GENS still has strong cash flow generation.
"With net cash of c.S$3.7bn, equivalent to 40% of GENS market capitalisation, GENS remains in a strong position to fund any potential development of an integrated resort despite increasing its dividends," it said.
Heeding shareholders call to return cash and a sign of confidence over GENS's cashflow generation ability GENS declared its first interim dividend of 1.5 Scts.
For the full year, GENS guided it will also pay a final dividend which DBS Vickers Securities estimate to be 1.5 Scts, similar to what was declared in FY15.
"We believe GEN is able to sustain the payment of c.S$360m in dividends per annum going forward given it generates in excess of S$600m in free cash flow (after payment of coupon for the perpetual securities)," it said.
According to guidance from GENS, the bill to legalise casino in Japan will be presented to the Japanese parliament on 9 November.
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