Comprehensive Overview of Genting Singapore
The report on Genting Singapore presents a detailed analysis of the operator’s performance across its multiple business segments. The focus is on the latest quarterly and full‐year metrics, operational challenges, strategic adjustments ahead of new attractions, and forward-looking recommendations. The analysis offers insights into how pre-opening disruptions, ongoing renovations at key attractions such as Hard Rock Hotel, the Forum, Universal Studios, and other changes have influenced revenue streams and profitability.
4Q24 and FY24 Performance Highlights
In 4Q24, Genting Singapore (GENS) experienced a decline in overall revenues by 5.4% year-over-year as a result of ongoing renovations at Resort World Sentosa (RWS). However, the gaming segment showed strong recovery – gaming revenue rose 25.9% on a quarter-on-quarter basis, benefiting largely from the normalization of VIP win-rates. Non-gaming revenue, on the other hand, saw a 4.7% year-over-year drop. As a result, the adjusted EBITDA margin in 4Q24 improved by 7.6 percentage points to 36.8%. The consolidated FY24 performance met expectations with EBITDA in line at 103.0% of in-house estimates and 96.4% of Bloomberg consensus estimates. A final dividend of 2.0 S cents per share for 2H24 was proposed, bringing the full-year dividend per share (DPS) back to 4.0 S cents – levels reminiscent of the pre-Covid era of FY19.
Operational Challenges and Future Outlook (FY25F and FY26F)
Management has signalled that the ramp-up of operations in 1H25F, driven by pre-opening disruptions relating to new attractions, will likely pressure profitability. Significant improvements are anticipated in 2H25F once new attractions come online. Additionally, higher operating expenses are expected as additional staff are hired to manage the upcoming pre-opening activities. The new all-suite hotel slated to replace the Hard Rock Hotel is positioned for a Q3 2025 launch, while the SEA Aquarium will temporarily close for 2.5 months to allow for the preparation and transition to the Singapore Oceanarium set to open in 3Q25F. The gradual opening of the Forum aims to achieve around 70-80% tenant occupancy by 3Q25F with subsequent positive impacts on earnings. Understanding these near-term challenges, the consensus remains cautiously optimistic with a reiterated “Add” call, underpinned by a target price of S\$1.05, equivalent to 7.8x FY26F EV/EBITDA. The report further highlights that despite 1H25F subdued profitability, the fundamentals remain sound with strong net cash reserves of S\$3.6 billion (approximately 38% of the current market capitalization).
Financial Metrics and Key Ratios
The comprehensive financial summary consolidates:
Revenues: The revenue envelope is expected to grow steadily from S\$2,418m in Dec-23A to S\$3,173m by Dec-27F.
Operating EBITDA: With a slight dip noted in FY24 versus FY23, the adjusted EBITDA figures recover and improve progressively to S\$1,302m by Dec-27F.
Net Profit: Net profit figures reflect a cautious trend where, despite temporary setbacks, there is a gradual recovery noted in the forecast period with core net profit stabilizing.
Margins and Multiple Metrics: EBIT margins, normalized EPS, and dividend payout ratios (around 5.16%-as projected) feature prominently. Price-to-cash flow and EV/EBITDA multiples have been benchmarked against consensus estimates, and the normalized P/E remains in line with competitive peers.
Key Catalysts and Risks
The report outlines several re-rating catalysts, such as:
• Bumper quarterly earnings fueled by higher-than-expected win rates in the gaming segment.
• An uptick in tourist arrivals.
• Incremental improvements post the completion of tenant take-up in the Forum.
Conversely, potential risks are identified as:
• Further delays in the completion of construction works.
• Higher recognition of bad debts.
• Operational headwinds in 1H25F due to increased pre-opening expenses.
ESG Perspectives and Sustainability Initiatives
GENS holds a combined ESG score of B, as per LSEG ESG ratings, a reflection of its constrained environmental impact and a relatively higher scrutiny on controversies. Two fines in 2023 due to lapses in prescribed customer due diligence have impacted its controversies score. The report notes that, without these lapses, the ESG rating could have improved to a B+. The operator’s commitment to green infrastructure is evident in the RWS 2.0 Waterfront Development project, designed to not only reduce the construction footprint but also enhance energy efficiency. This initiative is expected to positively influence the broader hospitality sector while reinforcing the company’s commitment to sustainability in adherence to the United Nations’ Sustainable Development Goals, the Paris Climate Agreement, and the Singapore Sustainable Blueprint plans.
Peer Group Analysis and Comparative Metrics
Malaysian Peers
The report provides a detailed benchmarking of Genting Singapore against its Malaysian counterparts:
Genting Malaysia (GENM MK): Valued at S\$2.4 with a target price of S\$3.65. The Malaysian peer exhibits higher growth metrics with a 24.0% CAGR and improved EPS performance. EPS growth in 3Y is notably robust, and dividend yields remain competitive.
Genting Bhd (GENT MK): Trading at S\$3.8 with similar “Add” recommendations, the company displays moderate earnings trajectory and steady operational performance with attractive valuation multiples.
Korean Peers
In the Korean market, the peer comparison includes:
Paradise (034230 KS): A high market cap with projected EPS in the 14.7 – 13.3 range.
Grand Korea Leisure (114090 KS): Trading performance shows improvements with robust growth, though with recent headwinds impacting EPS figures.
Kangwon Land (035250 KS): A standout despite a decline in EPS margins due to cyclical fluctuations, displaying volatilities in operational management.
Global Peers
Global integrated resort operators are compared against standards that include:
Melco Resorts & Entertainment (MLCO US): With a valuation based on S\$6.17 and dynamic earnings, though the peer suffered dramatic percentage
