Analysts positive on Genting Singapore amid 'crisis' valuations

Analysts positive on Genting Singapore amid 'crisis' valuations

Stanislaus Jude Chan
09/11/18, 12:04 pm

SINGAPORE (Nov 9): Analysts are staying positive on Genting Singapore (GENS) amid a selldown which they say is “unjustified”.

Since reporting its 2Q18 results after market close on Aug 3, GENS has seen its share price plunge close to 28%. Shares in GENS closed at $1.23 on Aug 3, and closed at 89 cents on Nov 8.

“In our view, GENS is unjustifiably trading at ‘crisis’ valuations of 5.4x FY19 EV/EBITDA or nearly half the 5-year mean and 1.3x FY19 P/BV or only 0.1x above the Global Financial Crisis trough,” says Maybank Kim Eng Research analyst Yin Shao Yang in a Friday report.

The brokerage is upgrading GENS to “buy”, from “hold” previous, and raising its target price by 3 cents to $1.29.

Over at CGS-CIMB Research, lead analyst Cezzane See agrees that GENS is “unduly pricing in crisis levels”.

“Market [is] unduly pricing in watershed valuations,” See says in a Thursday report. “At 5.8x FY19F EV/EBITDA, the market is pegging GENS to trough valuations of end-FY15 to FY16.”

As she explains it, GENS’ adjusted EBITDA was below $900 million, trade receivable impairments were above $230-260 million per annum, and receivables balance was above $200 million during that period.

“9M18 adjusted EBITDA, trade receivable impairments and end-Sep 18 trade receivable balances are on relatively firmer footing,” See says.

As such, CGS-CIMB is keeping its “buy” call on GENS. However, the brokerage is lowering its target price to $1.28, from $1.44. According to See, the lower target price is “just to be cautious on global uncertainties”.

Meanwhile, Maybank’s Yin says he is “pleasantly surprised” by GENS’ 3Q18 results.

GENS before market open on Nov 9 announced a 46% rise in 3Q18 earnings to $210.4 million from $143.8 million a year ago on lower operating expenses.

Revenue for 3Q18 rose 1% to $639.1 million from a year ago as the group’s revenue continued to grow.

See: Genting Singapore reports 46% rise in 3Q earnings to $210.4 mil on lower operating expenses

“Genting Singapore’s 3Q18 solid performance was due to solid growth in its overall gross gaming revenue (GGR) from both VIP and mass segments,” says RHB’s Singapore Research team, adding that the results were “within expectations”.

“We still like Genting Singapore for its continued focus on growing its VIP segment, and its potential expansion to the Japan market,” RHB says. “We believe the stock is undervalued – since it is trading at a relatively low P/E of 13x, vs the peer average of 18x.”

Amid a transfer of coverage, RHB says it is placing its estimates and target price under review. The brokerage has a “buy” call on GENS with a target price of $1.42.

As at 11.59am, shares in GENS are trading 7 cents higher, or up 7.9%, at 96 cents.

According to Maybank valuations, the stock has an estimated price-to-earnings ratio of 12.9 times and a dividend yield of 3.9% for FY19.

Living it up

SINGAPORE (Mar 25): This is the season for indices. On March 20, Singapore was ranked 34th in the World Happiness Index — less happy than Taiwan, but far more cheery than Hong Kong and China, as well as its neighbours, Thailand, Malaysia and Indonesia. Globally, the Scandinavian and north European cities top the index; and New Zealand, Canada and Austria round out the top 10. The index this year focuses on happiness and the community, taking into account how happiness has evolved over the years, as affected by technology, social norms, conflicts and government policies. A week earlier, th....

The charismatic bankrupt who allegedly pulled the strings behind Singapore's largest stock manipulation scandal

SINGAPORE (Mar 26): Garbed in purple overalls, John Soh Chee Wen cuts a relaxed figure as he takes his seat. The garment falls fittingly on his athletic frame, not unlike a designer suit. It could well have made a fashion statement, save for the word "prisoner" emblazoned in white across the back. As his legal team huddled around him before the start of the trial, the 60-year-old is a picture of calm. At one point, he casually flashes a thumbs up at his lead counsel, N Sreenivasan, a managing director and senior counsel at Straits Law LLP. Then, as he turns back to his seat in the dock, ....

OCBC still bullish on banking stocks after a lacklustre FY18

SINGAPORE (Mar 26): OCBC Investment Research remains bullish on Singapore’s banking space while keeping its sector “overweight” with “buy” calls on both DBS and UOB, which have been given fair value estimates of $29.31 and $28.30, respectively. Both stocks had dividend yields of 4.8%, with DBS and UOB trading at the respective book values of 1.3 times and 1.1 times, or at an average of 1.2 times historical book as at the close of Wednesday. In a Tuesday report, OCBC analyst Carmen Lee notes that raising this average to 1.3 times book and factoring a 10% premium for DBS over the....