Lady luck shall return, analysts keep 'buy' on Genting Singapore

UOBKH analyst believes Genting Singapore would deliver sequentially higher earnings q-o-q compared to MBS in 3QFY2023.

Analysts at Citi Research, UOB Kay Hian and CGS-CIMB Research are keeping their “buy” and "add" calls on Genting Singapore G13 after rival Marina Bay Sands (MBS) had shown continued strong earnings momentum and record high revenue.

New York Stock Exchange-listed Las Vegas Sands’ 3QFY2023 ended September results revealed that MBS’ adjusted ebitda surged about 14% q-o-q to US$491 million ($674 million) — the highest quarterly figure since the onset of the pandemic and well exceeding 2019 numbers.

In its 3QFY2023, MBS’ net gaming revenue improved 7.6% q-o-q, exceeding pre-pandemic levels. On a constant currency basis, the mass market’s 3QFY2023 gross gaming revenue (GGR) declined 1% q-o-q, while VIP GGR rose 42% q-o-q.

Citi analysts George Choi and Ryan Cheung expect Genting Singapore’s Resorts World Sentosa (RWS) to enjoy a similar, but slightly lower recovery during the quarter as the Grand Prix took place in the Marina Bay area in mid-September.

They conservatively forecast Genting Singapore to report ebitda of $275 million for 3QFY2023, a 6% improvement q-o-q, implying a full recovery on its pre-pandemic level.

“RWS is one of the biggest beneficiaries from Singapore’s re-opening. A likely increase in dividends from 3 cents per share in FY2022 to 4 cents per share in FY2023 is another reason for investors to buy this stock, in our view,” add Choi and Cheung.

CGS-CIMB analyst Tay Wee Kuang thinks that Genting Singapore could surpass FY2019 profitability in 3QFY2023. It is also expected to be able to achieve his FY2023 adjusted ebitda forecast of $1 billion, especially with its stronger VIP gaming segment compared to MBS and new keys added from the newly refurbished Ora Hotel (formerly Festive Hotel).

UOBKH analyst Jack Goh concurs, expecting Genting Singapore to benefit from the commendable GGR growth trend in Singapore. He believes that the company would deliver sequentially higher earnings q-o-q compared to MBS in 3QFY2023.

This will be anchored by higher non-gaming revenue sustained by the nation’s q-o-q growth in hotel room rates and spending per head and the 30% improvement in key inventories with the reopening of Ora Hotel.

The accelerated recovery of international tourist arrivals upon ramp-up of flight capacity and normalisation of ticket fares would also provide support. “We expect Singapore’s gaming sector to sustain the past few quarters’ resilient recovery, in tandem with the influx of international visitors following restoration of intra-regional flight frequency and removal of most pandemic-related restrictions.

“The market should sustain its positive sentiments towards Singapore’s gaming sector which includes Genting Singapore in 2HFY2023, anchored by the sector’s meaningful core profitability recovery which promises defensiveness amid the current market volatility,” says Goh.

Citi, UOBKH and CGS-CIMB's target price for Genting Singapore are $1.26, $1.25 and $1.30 respectively.

As at 10.29am, shares in Genting Singapore are trading 1 cent lower or 1.2% down at 82 cents.

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