Genting Singapore – Better Quarters Ahead

Excerpts from UOBKayHian report

Genting Singapore (SGX: G13)

• Genting Singapore 1Q23 core adjusted EBITDA undershot expectations, falling 25% qoq from the seasonally strong 4Q22, and reflected lower non-gaming revenues and presumably a less favourable normalisation of luck factor.
• RWS’ gaming revenue significantly trailed rival MBS’. Nevertheless, we maintain our 2023 earnings forecasts, to reflect better luck factor, stronger non-gaming revenues and also improving foreign visitation in the coming quarters.

Maintain BUY. Target price: S$1.25

Results moderately below expectations

Resorts World Singapore’s (RWS) 1Q23 adjusted EBITDA of S$191.7m (-25% qoq; +54% yoy) accounted for 16% of our full-year forecast. Gaming and non-gaming revenue fell 9% and 15% respectively from the seasonally strong 4Q22. The gaming division accounted for 70% of group revenue in 1Q23. Adjusted EBITDA fell 7.6ppt to 39.6%.

Poorer luck factor

EBITDA declined qoq from the seasonally stronger 4Q22 and was larger than expected, as we gauged that the VIP win percentage fell significantly below the theoretical level, vs 4Q22’s above-theoretical win percentage.

Gaming volumes appear to remain resilient

Genting Singapore’s (GENS) press announcement stated that RWS’ 1Q23 hold-adjusted GGR would have improved 12% qoq to S$530m. This works out to having a hypothetical 34% share of Singapore’s GGR, given rival Marina Bay Sand’s near-record 1Q23 GGR of S$1.0b.

Valuation/Recommendation

Maintain BUY and target price of S$1.25, which implies 9.9x 2023F EV/EBITDA (10-year mean). GENS offers a 5% prospective dividend yield, backed by S$0.27 net cash/share (23% of market cap).

You can find the full report here and the company website here.