Overview
Genting Singapore, a Singapore-based regional leisure, hospitality and integrated resorts development specialist, has delivered a robust performance in 4Q24. The research report by UOB Kay Hian underscores the company’s operational improvement driven primarily by resilient gaming revenue. With a BUY recommendation maintained at a share price of S\$0.775 and a target price of S\$1.12 (yielding an attractive upside of +44.5%), the report paints a promising picture for the company as it continues to roll out new attractions and capitalize on the rebound in regional tourism.
Key Financial Highlights
The report provides a detailed breakdown of Genting Singapore’s 4Q24 results and forecasted financial performance for the upcoming years:
- 4Q24 Revenue: Recorded at S\$612.2 million, showing a 9.0% quarter-on-quarter growth in Singapore revenue.
- Gaming Revenue: S\$415.6 million in 4Q24, with a remarkable 26% QoQ surge, reaching 107% of pre-pandemic levels, continually driven by strong VIP luck factors.
- Non-Gaming Revenue: Recorded at S\$196.5 million in 4Q24, which experienced a 15% QoQ decline attributed to softer patronage and operational factors like the temporary closure of the Hard Rock Hotel for renovations.
- Core Adjusted EBITDA: Achieved S\$225.4 million in 4Q24 with a significant quarter-on-quarter improvement of 37.5% though slightly lower on a yearly basis.
- Core Net Profit: Came in at S\$143.8 million in 4Q24 with an appreciable QoQ surge of 58.1% and a modest annual increase of 13.1%.
- Dividend Yield: Offers a prospective yield of approximately 5.2% with final dividend payout levels maintained.
Detailed 4Q24 Results Analysis
The performance in 4Q24 was largely within expectations, with the resort’s figures reflecting improved operational efficiency compared to the previous quarter:
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Resort World Sentosa (RWS) Performance: The revenue performance in 4Q24 exhibited a 9% increase quarter-on-quarter, while EBITDA improved markedly by 38% on a quarterly basis.
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Operational Drivers: The strong VIP hold combined with a solid gaming outcome was pivotal in offsetting the softness in patronage observed due to the strong SGD and the absence of mega events.
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Full-Year Outlook: The 2024 EBITDA figures represented 98% to 96% of both the firm’s and consensus full-year forecasts, signaling robust performance despite seasonal headwinds.
Gaming Revenue Performance
On the gaming front, Genting Singapore has leveraged a markedly strong VIP luck factor. The report highlights that, despite a softening in betting volume (with gross gaming revenue down 10% QoQ), the VIP gaming revenue surged:
- VIP Gaming: Estimated to have surged by 28% quarter-on-quarter, underscoring the influence of high base VIP win percentages reaching 3.50% in 4Q24.
- Market Position: This gaming strength has helped the business recover to 107% of pre-pandemic figures, contrasting sharply with the mass market gaming segment which witnessed a 24% drop due to seasonally high bases in the previous quarter.
Non-Gaming Revenue & Future Catalysts
While the non-gaming segment experienced a modest decline, the report identifies several upcoming catalysts that are expected to revitalize this key revenue stream:
- Operational Challenges: RWS non-gaming revenue slipped by 15% QoQ and 5% YoY, impacted by the closure of key facilities such as the Hard Rock Hotel, which saw available rooms decline from 1,530 to 1,190.
- Hotel Performance: Hotel occupancy fell to 78% from 86% and the average room rate moderated from S\$520 to S\$500.
- Upcoming Attractions: The full launch of RWS 1.5 is pinpointed as a key re-rating catalyst with the rollout of attractions such as Illumination’s Minion Land, the forthcoming Oceanarium, a super luxury all-suite hotel scheduled for 3Q25, and an expansive Waterfront development aimed at adding 700 hotel rooms over time.
- Additional Developments: A timeline of developments also includes the Van Gogh: The Immersive Experience, Hotel Ora renovations, and the Gourmet Park at The Bull Ring – all expected to enhance the resort’s vibrancy and broaden non-gaming revenue streams.
Earnings & Financial Forecast
The report provides comprehensive forward guidance for Genting Singapore over the next few years:
- Revenue Projections: Forecasted to rise from S\$2,530 million in 2024 to S\$2,922 million by 2027, reflecting a steady growth trajectory.
- EBITDA Margins and Operating Profit: EBITDA is expected to improve from S\$960 million in 2024 to S\$1,285 million in 2027, while operating profit demonstrates a consistent upward trend reaching S\$864 million by 2027.
- Net Profit & Adjusted Earnings: Net profit (both reported and adjusted) also shows encouraging growth, with EPS forecasted to gradually increase from 4.9 cents in 2024 to 6.3 cents by 2027.
- Valuation Metrics: Key metrics such as PE ratio, EV/EBITDA, P/B, and net margin are detailed, with the 2025 EV/EBITDA projected at 5.2x – slightly below the mean yet supportive of the BUY rating.
- Balance Sheet Strength: The balance sheet remains robust with a net cash position of S\$3.58 billion, equivalent to 29.6 cents per share, providing ample flexibility for capital deployment and potential brownfield/greenfield investments.
Comparative Analysis: Genting Singapore vs. Marina Bay Sands
The report also juxtaposes the performance of Genting Singapore with that of Marina Bay Sands (MBS):
- Earnings Trend: Comparative data indicate that while both companies have witnessed fluctuations in their quarterly revenue, EBITDA, and gaming revenues, Genting Singapore’s gaming segment has rebounded strongly in 4Q24.
- Revenue Comparison: MBS posted higher overall
