CLSA analyst Sue Lin Lim has upgraded Genting Singapore (GENS) G13 to a “buy” call after Las Vegas Sands (LVS) released its results for the 2QFY2023 ended June. Lim has kept her target price unchanged at $1.26.
“LVS’s earnings call indicated the Singapore gaming industry continued to chart progress towards recovery as visitations improved with increases in flight capacity,” Lim writes in her report dated July 20.
“MBS’s recovery should be a strong read-through for GENS, though it tends to lag that of MBS,” she adds.
During the 2QFY2023, Marina Bay Sands (MBS) continued to see recovery with mass wins hitting an all-time high of US$580 million ($770 million), whilst both non-rolling table wins and slot wins surged to 129% and 149% of 2019 levels respectively.
Meanwhile, rolling volumes fell short of pre-Covid levels but reached 84% of MBS’s 2QFY2019 figures. Non-gaming segments also showed growth with occupancy at 97%, down 1% from 1QFY2023.
MBS’s adjusted ebitda hit US$432 million with a margin of 46.7%, while hold-normalised ebitda stood at US$413 million with a margin of 45.8%.
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The further relaxation of travel restrictions and increased flight capacity have enabled ongoing visitation recovery, building up momentum and expectations since the 1QFY2023, explains Lim.
This pattern of recovery has followed in Changi Airport passenger volume, with passenger volume in May 2023 reaching 89% of 2019 levels.
On the back of MBS’s results, Lim expects to see further improvements to Singapore’s gaming industry as visits from Chinese tourists - which has remained below its pre-Covid levels - should see an “airlift recovery” from here. The return of Chinese tourists, says Lim, would be a “crucial factor” in driving ongoing tourism spending in Singapore and should, by extension, benefit MBS and GENS.
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GENS will be releasing its 2QFY2023/1HFY2023 results ended June on Aug 10.
As at 4.25pm, shares in GENS are trading flat at 93 cents.
