Citi Research analysts George Choi and Ryan Cheung have kept their “buy” call on Genting Singapore as they expect its integrated resort, Resorts World Sentosa (RWS) to be a major beneficiary from the return of Mainland Chinese and Indonesian visitors.
The analysts’ report dated July 19 comes on the back of Las Vegas Sands’ results for the 2QFY2023 ended June 30. RWS’s rival and fellow integrated resort, Marina Bay Sands, reported a set of results that stood in-line with the analysts’ expectations.
Despite the still-subdued visits from China, MBS’s net revenue for the quarter grew by 9% q-o-q to US$925 million ($1.22 billion), which is driven mainly by the ongoing recovery in visitors to Singapore.
The resort’s VIP gross gaming revenue (GGR) grew by 7% q-o-q thanks to the higher VIP hold of 3.71% versus the 1QFY2023’s 2.96%, although this was offset by the 15% q-o-q decline in volumes.
Mass volumes during the three-month period exceeded its pre-Covid-19 level (in the 2QFY2019) by 56%. Slot volumes exceeded its pre-pandemic level by 63%.
MBS’s total mass GGR reached another property high of US$580 million, beating its previous high of US$549 million in the 1QFY2023.
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Its property ebitda improved by 10% q-o-q to US$432 million, which included a positive “luck impact” of around US$19 million. MBS’s luck-adjusted ebitda of US$413 million during the quarter stood largely in-line with Choi and Cheung’s forecast of US$421 million.
Despite the decent set of results from MBS, Choi and Cheung note that they should not be “overaggressive” on their operating leverage expectations for Genting Singapore as operating expenses (opex) inflation is still ongoing in Singapore.
To this end, the analysts have lowered their earnings estimates on Genting Singapore for the FY2023 to FY2025 by 2% to 6% to reflect their “more prudent” opex assumptions at RWS.
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The reduced estimates also come on the back of more conservative forecasts on RWS’s non-gaming revenues due to renovations.
“We expect RWS to take at least a couple of quarters to recover its non-gaming revenues,” say the analysts.
Accordingly, they have also lowered their target price to $1.23 from $1.26 previously.
Genting Singapore will be reporting its results for the 1HFY2023 and 2QFY2023 ended June 30 on Aug 10.
“We are forecasting, on a luck-adjusted basis, Genting Singapore to report 2QFY2023 revenue of $520 million and ebitda of $205 million. Our 2QFY2023 ebitda forecast represents a 7% q-o-q improvement,” write Choi and Cheung.
On July 20, DBS announced that it has priced US$400 million worth of seven-year senior unsecured notes due 2030 for Genting’s Resorts World Las Vegas. The notes carry a coupon of 8.45% per annum (p.a.) and has a reoffer yield of 8.75%.
DBS is the joint global coordinator, lead manager and bookrunner for the notes.
Shares in Genting Singapore closed 1 cent higher or 1.06% up at 95 cents on July 20.
