Analysts at Citi Research, Maybank Securities, DBS Group Research, UOB Kay Hian (UOBKH) and OCBC Investment Research (OIR) are keeping “buy” on Genting Singapore G13 following the gaming company’s 1QFY2024 ended March earnings beat.
For its 1QFY2024, Genting Singapore reported an adjusted ebitda of $369.5 million, up 92.7% y-o-y, surpassing street expectations with the quarter’s earnings accounting for about 32% of consensus full year estimate.
DBS analysts note that the stronger-than-expected performance was largely driven by a very strong showing in the company’s gaming segment, which surged both sequentially and annually on the back of volume growth and abnormally high VIP win rate of 4.62% during the period.
“Despite the exceptionally high VIP win rate, Genting Singapore’s adjusted ebitda margin of 47.1% in 1QFY2024 only slightly exceeded our expectations, likely due to elevated bad debt losses during the period,” the analysts add.
Genting Singapore’s VIP volume and mass market gross gaming revenue (GGR) growth were within Maybank’s Yin Shao Yang’s expectations, driven by the en mass return of Chinese visitors after visa requirements for them were waived on February 9.
He notes that although the share of mass market GGR eased to 31%, Maybank understands that this is due to the 360 room Hard Rock Hotel being shut in March for renovation and rebranding. The hotel will reopen in 1QFY2025.
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Aside from this, Universal Studios Singapore is also hosting Naruto: The Gallery this year — the first outside of Japan and Harry Potter: Visions of Magic, which will be launched at the renovated theater in late 2024, Citi analysts George Choi and Ryan Cheung highlight.
They further note that the ongoing developments taking place at Universal Studios Singapore’s Minion Land, the Singapore Oceanarium and the Central Lifestyle Connector are on track for opening in phases from 1Q2025, while the ongoing tender for the new Waterfront development is expected to be awarded in 3Q2024.
Moving forward, UOBKH analysts are expecting a fruitful 2024 for Genting Singapore, featuring a confluence of positive catalysts. Their optimism is premised on an accelerated recovery of foreign visitations and flight frequencies; mega entertainment events in the pipeline; a sustained trend of higher spending per capita in Resorts World Sentosa (RWS); as well as RWS’s intensified marketing efforts through digital platforms, which will attract more footfall and spending.
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DBS highlights that China’s specific warning to its citizens on March 18 to avoid gambling in Marina Bay Sands and RWS was the first directed at Singapore. While it is still too early to tell, the analysts do not expect this to significantly impact Genting Singapore due to the challenges surrounding the regulation of Chinese citizens’ activities overseas and the enforcement of anti-gambling policies abroad. "Genting Singapore’s share price has been trending sideways since its 4QFY2023 results, and we believe that its solid forward earnings momentum is not adequately reflected in its share price, presenting a solid buying opportunity,” they add.
Meanwhile, OIR analysts point out the stock's undemanding valuations,currently trading at an attractive 6x forward ev/ebitda, more than 1 standard deviation below its 5-year historical average of 7.9x.
Citi, Maybank, DBS, UOBKH and OIR analysts’ target prices for Genting Singapore are $1.16, $1.10, $1.15, $1.25 and $1.17 respectively.
As at 11.29am, shares in Genting Singapore are trading 4 cents higher or 4.5% up at 92.5 cents.
