Despite reporting poor results for 1Q 2023, Maybank IB has maintained a Buy call on Resort World Singapore after flagging that the group will improve for the second quarter which it did.
Going forward and barring a global recession, the house expects 2H23 to be even better on seasonally more visitors from namely, China. Jul 2023 seat capacity from China to Singapore has recovered to 74% of pre-Covid levels.
Earnings estimates and SGD1.12 DCF-based TP are maintained. Maybank IB continues to like GENS as a post-Covid recovery play. Earnings and dividends within expectations 2Q23 core net profit of SGD160.6m brought 1H23 core net profit to SGD291.8m which was within our expectations at 46% of our FY estimate.
As noted, net gaming revenue (+20% QoQ) and non-gaming revenue (+31% QoQ) recovered sequentially on more visitor arrivals (link). While the first interim DPS of SGD1.5 cents accounted for only 38% of our FY estimate, Maybank deems it in line with expectations as GENS traditionally declares more DPS in the 2H. Recovery in 1H23 has been broad-based Despite 1H23 Chinese visitation to Singapore being tepid at 23% of 1H19 levels, RWS’ operations (e.g. VIP volume, non-gaming revenue) still recovered throughout 1H23 as the recovery has been broad-based (i.e. driven not just by the return of Chinese visitors but the return of South East Asian visitors, namely from Malaysia and Indonesia).
Thus, the house believes that RWS is better positioned to withstand any potential deceleration in the Chinese economy than say the Macanese integrated resorts. 2H23 ought to be a better HoH, in its view As a leisure destination, RWS traditionally welcomes more visitors in Jul and Aug due to the summer holidays in the northern hemisphere. After a slow start in 1H23, GENS also noted that Chinese visitors are starting to return en masse. OAG data indicate that Jul 2023 seat capacity from China to Singapore has recovered to 74% of Jul 2019 levels. Barring a global recession, GENS expects 2H23 to be better HoH.
