Comprehensive Analysis of Genting Singapore’s Financial Performance

Broker Name: Maybank Research Pte Ltd

Date of Report: November 8, 2024

Introduction

Genting Singapore (GENS SP), a prominent player in the gaming sector, has recently released its financial performance report for the third quarter of 2024. Despite a challenging quarter, the company remains a valuable investment. This article provides a deep dive analysis of Genting Singapore’s financial results, strategic initiatives, and future outlook.

Q3 2024 Financial Performance Overview

Genting Singapore’s Q3 2024 results came in below expectations, primarily due to lower VIP volume and mass market gross gaming revenue, coupled with higher-than-expected bad debts. The company’s core net profit for Q3 2024 was SGD 91 million, representing a significant decline of 58% year-on-year and 18% quarter-on-quarter. For the first nine months of 2024, the core net profit stood at SGD 450 million, down 11% from the previous year.

Revenue Breakdown

• Q3 2024 turnover was SGD 561.9 million, a decline of 18.5% year-on-year.
• Singapore IR gaming revenue fell by 28.2% year-on-year to SGD 330 million.
• Singapore IR non-gaming revenue saw a slight increase of 0.7% year-on-year to SGD 231.8 million.

EBITDA Analysis

The adjusted EBITDA for Q3 2024 was SGD 163.9 million, down 52.5% year-on-year. The company’s EBITDA margin also saw a significant drop, standing at 29.2% compared to 50.1% in the same quarter last year. The decline in EBITDA is attributed to lower VIP volumes and mass market gross gaming revenue, as well as higher bad debts.

VIP and Mass Market Performance

Genting Singapore’s VIP volume for Q3 2024 was SGD 7.7 billion, a decrease of 32% year-on-year. The company’s VIP win rate was 2.45%, 74 basis points lower than the previous year. The mass market gross gaming revenue for the quarter also declined by 6% quarter-on-quarter to SGD 384 million.

Future Outlook and Strategic Initiatives

Despite the disappointing quarterly results, Genting Singapore remains a promising investment due to its long-term strategic initiatives and growth prospects.

RWS 2.0 Expansion

Genting Singapore is investing in its “RWS 2.0” expansion project, which aims to enhance the appeal and earnings of Resorts World Sentosa. The project involves expanding gaming and non-gaming facilities, which is expected to drive future growth and increase the company’s market share.

Thai Casino License Bid

Genting Singapore is expected to jointly bid for a Thai casino license next year. This expansion into new markets could provide significant growth opportunities and diversify the company’s revenue streams.

Financial Metrics and Valuation

Genting Singapore’s key financial metrics provide insights into its performance and valuation.

EBITDA Forecast

• FY24E EBITDA is expected to be SGD 965.4 million, a decrease of 6% year-on-year.
• FY25E EBITDA is projected to be SGD 958.2 million.
• FY26E EBITDA is forecasted to be SGD 967.3 million.

Core Net Profit Estimates

• FY24E core net profit is estimated at SGD 606.2 million, down 4.6% year-on-year.
• FY25E core net profit is projected to be SGD 589.2 million.
• FY26E core net profit is forecasted to be SGD 584.8 million.

DCF-Based Valuation

Maybank Research has revised its Discounted Cash Flow (DCF) based target price for Genting Singapore to SGD 1.01, down from SGD 1.10. The valuation takes into account the company’s net cash position, investments, and the RWS 2.0 expansion project.

Value Proposition

Genting Singapore offers a unique value proposition as the only listed pure exposure to a Singaporean integrated resort. The company’s strong balance sheet, net cash position, and strategic initiatives position it well for future growth.

Share Price Performance

Genting Singapore’s share price has experienced fluctuations over the past year, influenced by various factors such as the COVID-19 pandemic, economic slowdown in China, and the reopening of China’s borders. Despite these challenges, the company’s long-term growth prospects remain intact.

Conclusion

Genting Singapore’s Q3 2024 financial performance may have fallen short of expectations, but the company’s strategic initiatives and long-term growth prospects make it a valuable investment. The RWS 2.0 expansion and potential Thai casino license bid are expected to drive future growth and enhance shareholder value.