SINGAPORE (Nov 8): OCBC Investment Research continues to expect Genting Singapore to deliver strong EBITDA growth for the remaining quarter of the year.
Looking ahead to 2018, the research house expects Genting Singapore to continue to enjoy top-line growth from a steadily recovering gaming sector, higher operating margins, as well as manageable receivable impairments.
Indeed, the gaming segment has seen better volume from both the VIP as well as premium mass business, says analyst Eli Lee.
As for the non-gaming segment, Lee notes that the Maritime Experiential Museum will have a soft opening during the Christmas holiday season.
Visitors can also look forward to eating at the fine dining restaurant, Teppan by Yonemura, which will also be opening.
Notably, events such as “RWS Street Eats” as well as “The Great Food Festival” have managed to attract a collective 170,000 visitors.
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“We believe the success of such activities as well as future events of a similar kind will help to further bolster RWS’s attractiveness as a lifestyle destination,” says Lee.
Gross profit margins have also improved q-on-q for six quarters, from 19.3% in 2Q16 to 48.3% in 3Q17.
“After making adjustments, our FCFE-based fair value from $1.32 to $1.35. We reiterate ‘buy’,” says analyst Eli Lee.
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To recap, Genting Singapore posted another strong set of quarterly results this year. 3Q17 revenue increased 8% y-o-y to $629.9 million or 26.2% of our full-year forecast, supported by an 11% increase in gaming revenue on the back of stronger VIP and premium mass business volume.
See: Genting Singapore posts 35% increase in 3Q earnings to $143.8 mil
Non-gaming revenue remained healthy with the attractions business clocking higher average visitor spend and a 5% growth in daily average visitorship.
Genting Singapore’s hotels also recorded a more than respectable occupancy rate of 93%, significantly higher than the industry average.
9M17 revenue came up to 75.3% of OCBC’s full-year forecast.
With an improved operating margin and lower net impairment on receivables, 3Q17 adjusted EBITDA increased 37% y-o-y to $320.1 million or 28.6% of OCBC’s full-year forecast, at the higher end of its expectations. 3Q17 earnings jumped 35% y-o-y to $143.8 million.
Shares in Genting are up 2 cents at $1.29 or 21.5 times FY18 forecast earnings.
