Genting Singapore (GENS)’s share price has retreated since reporting below consensus results on 12 May 2023. Maybank Research (Maybank) in a recent report understands that operations have been improving steadily.
“While earnings before interest, tax, depreciation and amortisation (EBITDA) margins may come in a tad lower than we expected, absolute EBITDA is on track to recover to pre-COVID levels in financial year 2024 estimate,” said Maybank.
The research house trimmed their core net profit forecasts by 6-12% and DCF-target price to SGD1.12 from SGD1.18. The Buy call is maintained.
“Quarter-to-date, we understand that all major operating metrics such as VIP volume, mass tables gross gaming revenue, slot machine gross gaming revenue, non-gaming revenue are trending higher quarter-on-quarter,” said Maybank.
The high margin slot machine gross gaming revenue continues to grow, driven by locals. Non-gaming revenue which dipped 15% quarter-on-quarter in quarter one 2023 due to Singaporeans travelling abroad in Mar for the school holidays is also recovering.
Curiously, the five months of 2023 Chinese visitor arrivals came in at only 20% of the five months of 2019 levels. It follows that there is room for the aforementioned operating metrics to improve as seat capacity from China recovers.
