After three months of being shut, Resorts World Sentosa reopened on Jul 1 but its operations “will take more time to recover”, says Maybank analyst Yin Shao Yang in a July 23 report. As such, Yin has downgraded Genting Singapore to “hold” with a target price of 80 cents.
Yin now estimates an FY2020 net loss of $214.6 million ($49.4 million net profit previously). He has also cut his FY2012 profit forecast by 43%, but increases the group’s FY22F net profit by 2%.
“Singapore’s borders [are] still effectively shut, the gamblers who have been patronising RWS since it reopened are effectively all Singaporean citizens and permanent residents. Coupled with social distancing requirements, we estimate that the current VIP volume and mass market GGR [gross gaming revenue] may come in at only approximately 1/8 and 1/4 of pre-closure levels respectively,” says Yin.
Since its reopening, RWS has had to limit entry to Genting Rewards members and/or Annual Levy Holders. In the casino, every alternate electronic gaming machine is shut, and every table will be limited to four gamblers. Croupiers will also not accept bets from standing gamblers.
Yin says visitors from Malaysia are likely to return first once borders are opened, with Chinese visitor arrivals remaining low for an extended period. Visitors from Indonesia are also unlikely to return as quickly, as the Covid-19 situation is worsening there, says the analyst.
“By market, we gather that the mass market will recover faster than the VIP one as the former is geared more towards locals and Malaysians.”
That said, Maybank is maintaining its DPS forecast at 4 cents per annum as it considers Genting Singapore’s (GENS) huge net cash position, which will enable the company to continue paying dividends.
As at 2.25pm, shares in Genting Singapore are trading at 1 cent lower, or 1.32% down, at 74.5 cents.
