Genting Singapore is the sole winner in the cyclical consumer services sector. It tops for weighted ROE over the three-year period taken into consideration for this year’s Billion Dollar Club.
For FY2018, Genting Singapore’s ROE was 9.92%; for FY2019, it was 8.7% and for FY2020, it was 0.87%, giving the integrated resort operator a weighted ROE of 5%, which is higher than its sector peers.
As there were no winners within the cyclical consumer services industry sector for both growth in profit after tax and growth in shareholders’ returns, Genting Singapore took home the overall sector winner by default.
See also: Maybank Kim Eng upgrades Genting Singapore to 'buy' as it qualifies for Yokohama RFP process
As the stark difference between the company’s FY2019 and FY2020 ROE has shown, the latter year was a challenging one. Even for casual observers, there should be no surprise given how the pandemic has hurt the global aviation and hospitality industries.
For FY2020 ended last December, Genting Singapore’s revenue dropped by more than half to just over $1 billion from $2.48 billion generated in FY2019. Earnings in the same period shrunk to $69.2 million from $688.6 million.
See also: Billion Dollar Club: Of SPACs and sweat equity
Genting Singapore, in its earnings commentary, notes that the travel and tourism industry was severely battered in 2020 by the global outbreak of Covid-19. “Resorts World Sentosa (RWS) being an integrated resort destination built with the vision to predominantly attract international visitors was severely affected especially when travel borders were progressively closed. RWS experienced a very significant dip in international and regional visitor arrivals,” the company states.
Even with vaccinations becoming available, Genting Singapore is bracing for the possibility that international travel is unlikely to return to pre-Covid levels anytime soon. “The group remains cautious of the travel and tourism sector’s recovery and we are closely monitoring pandemic updates, travel restrictions and vaccination progress globally as well as in Asia.”
Meanwhile, Genting Singapore will continue to pursue its growth strategy with the $4.5 billion mega expansion of RWS.
See also: Booster shot by the ecosystem, for the ecosystem
Photo: Samuel Isaac Chua/The Edge Singapore
