Maybank Securities is keeping its “hold” call on Genting Singapore with a lowered target price of 83 cents.
In a May 13 report, analyst Yin Shao Yang has trimmed the target price by about 3% as he is wary that long-term earnings will be stifled by Thailand, which is mulling legalising integrated resorts (IR).
On the other hand, it seems that Genting Singapore is showing some improvement as the economy is reopening, as net profit after tax (NPAT) for 1QFY2022 ended March came in 17% higher y-o-y at $40.4 million, while revenue grew by 13% y-o-y to $314.5 million
See: Genting Singapore reports 17% y-o-y NPAT of $40.4 mil for 1QFY2022
Despite the improvement in numbers, the overall results were below the research house’s expectations.
“We gather that the earnings shortfall was due to higher-than-expected depreciation caused by accelerated depreciation of certain assets ahead of Genting Singapore’s $4.5 billion ‘RWS 2.0’ reinvestment programme,” says Yin.
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Nonetheless, the analyst expects Singapore’s reopened borders to translate into better future quarterly earnings going forward. More specifically, Yin expects business to gradually improve after Singapore, Malaysia and Indonesia have reopened their borders, coupling with Singapore removing the pre- and post-arrival testing.
“Barring a full-blown global recession, we opine that future quarterly earnings ought to be gradually better than that of 1QFY2022. Thus, our earnings estimates are unchanged,” says Yin.
As at 4.00pm, shares in Genting Singapore are trading at 78 cents or 1.2 times FY2022 book with a dividend yield of 2.6%.
Photo: The Edge Singapore/ Albert Chua
