Since reporting 2Q23 results in mid-Aug, Genting Singapore’s share price has fallen by 13% ostensibly on concerns over the VIP market. Maybank IB revealed that this is business as usual for the VIP market and the mass market continues to grow, the house maintains a BUY call on the stock
MIB believes there is no discernible impact on the VIP market from the AML case, conversations with investors reveal that there are fears that the Singaporean VIP market will be suppressed by VIPs avoiding casinos as investigations into the hitherto SGD2.8b money laundering case is ongoing. GENS stated that it did not notice any discernible decline in its
engagement with VIPs whether they be via its private jet programme that was introduced earlier this year or ‘meet and greet’ celebrity events.
Migration and return of Chinese buoying mass market
Even without meaningful Chinese visitation, RWS’ 1H23 mass market GGR hit c.100% of 1H19 levels. We understand slot machine GGR (40-50% of mass market GGR) is still trending higher on new migrants to Singapore while the mass tables GGR (50-60% of mass market GGR) is seeing a lot more meaningful Chinese play relative to 1H23. OAG data indicates that
Sep 2023 flight seat capacity from China to Singapore has recovered to 80% of Sep 2019 levels (Jun 2023: 60% of Jun 2019 levels).
Earnings estimates maintained
Earnings estimates are based on VIP volume stabilising at 87% of FY19A (2Q23: 81% of FY19A quarterly average) levels and mass market GGR growing to 105% of FY19A levels (2Q23: 98% of FY19A quarterly average) in FY23E and 120% of FY19A levels in FY24E and FY25E (Fig. 2). As alluded to, MIB expects mass market GGR to continue growing as more Chinese tourists return to Singapore. Based on estimates, GENS is trading at FY24E (full-year impact from the return of Chinese tourists) ex-cash PER of only 10x.
