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Only international visitors can help Genting Singapore recover revenue: analysts

Jovi Ho
Jovi Ho • 3 min read
Only international visitors can help Genting Singapore recover revenue: analysts
"Singapore’s ongoing relaxation of quarantine-free travel lanes and opening of borders will set the stage for FY2022F recovery."
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Genting Singapore is anticipating the return of international visitors, as 3QFY2021 results were affected by the rise in Covid-19 cases here.

In a Nov 10 note, RHB Group Research is maintaining “buy” on Genting Singapore, with a lowered target price of 90 cents from 92 cents previously.

“3QFY2021 results fell below expectations as Genting Singapore’s gaming and nongaming segments were negatively affected by the rise in Covid-19 cases, which saw stricter capacity measures in place at its premises. Despite the weak results, we remain positive with Singapore’s ongoing relaxation of quarantine-free travel lanes and opening of borders. This will set the stage for a strong FY2022F recovery as foreign visitors return to its premises,” notes RHB.

See: Genting Singapore reports 3QFY2021 earnings of $60.7 million, up 11% y-o-y

9M2021 core profit of $137.5 million was below RHB and consensus estimates, at 59% and 54% respectively. The negative deviation was due to a weaker-than-expected 3QFY2021 contribution from the gaming and nongaming segments, as the rising cases during this period led to various capacity restriction measures in place at Resorts World Sentosa (RWS) that saw lower visitation to the premises.

3QFY2021 revenue fell 9.2% q-o-q, attributable to the 13.9% decline in gaming revenue. Only two seated players were allowed per table during the Phase 2 (Heightened Alert) that lasted from mid-July to mid-August. Accordingly, 3QFY2021 EBITDA declined 30.7%. “We note that the lower EBITDA margin (-12.7 ppts) was likely due to the reversal of trade receivables impairment recognised in the previous quarter,” says RHB.

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“While 3QFY2021 results was weak, we are positive with the Government’s effort in permitting more international travel. Singapore has been expanding its vaccinated travel lane (VTL) scheme to visitors from designated countries for quarantine-free travelling. While we do not expect a full recovery of foreign visitors in FY2021, the ongoing reopening of borders and extension of quarantine-free travel to more countries bode well for a strong FY2022F recovery for Genting Singapore, especially when foreign visitors account for c.80% of its total visitorship historically,” adds RHB.

Meanwhile, Citi Research analyst George Choi notes that Genting Singapore’s 3QFY2021 results came in line with his expectations.

In a Nov 9 note, Choi is recommending “buy” on Genting Singapore with a target price of $1.01.

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Singapore announced a VTL with Malaysia on Oct 8. However, Choi expects the impact on Genting Singapore to be marginal. “Historically, most players from Malaysia entered Singapore via the land border instead of flying in.”

“However, we anticipate the launch of the VTL, which symbolises the all-important first step of the gradual resumption of normal travel between the two countries,” adds Choi.

DBS Group Research analyst Jason Sum is maintaining "buy" on Genting Singapore with an unchanged target price of $1.

"Near-term performance may remain lackluster due to extended Covid-19 restrictions and soft inbound tourism. However, we still anticipate a more pronounced recovery in 2HFY2022F," writes Sum in a Nov 10 note.

Conversely, Maybank Kim Eng Research analyst Yin Shao Yang is maintaining "hold" on Genting Singapore with a target price of 86 cents.

As at 3.58pm, shares in Genting Singapore are trading 0.5 cents higher, or 0.61% up, at 82 cents.

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