Genting Singapore Limited (GenS) reported a 29.5% year-on-year decline in core net profit to SGD227 million for the first half of FY2026 (1HFY26), with results coming in within HLIB Research’s expectations but slightly ahead of consensus.
HLIB Research said the earnings represented 54% of its full-year forecast and 56% of consensus estimates, but expects GenS to face a weaker second half amid macroeconomic uncertainty and softer travel demand linked to the prolonged Iran war.
The research house maintained its “Hold” recommendation on the stock but lowered its target price to SGD0.65 from SGD0.72.
The core net profit figure was derived after adding back exceptional items amounting to SGD70.9 million, mainly relating to a SGD64.6 million net impairment on trade receivables.
Revenue pressured by weaker tourist arrivals
On a quarter-on-quarter basis, GenS’ revenue declined 1.9%, with gaming revenue falling 0.6% and non-gaming revenue dropping 4.6%.
HLIB attributed the weaker performance primarily to a 15.3% decline in international tourist arrivals, as higher travel costs and more cautious consumer spending following the Iran war weighed on tourism demand.
The impact was partly offset by a more favourable gaming win rate.
Despite the lower revenue, adjusted EBITDA rose 17.8%, largely due to lower net impairment on trade receivables.
On a year-on-year basis, revenue increased 1.3%, with gaming revenue declining marginally by 0.2% while non-gaming revenue grew 4.6%.
The non-gaming segment benefited from the progressive ramp-up of new attractions, including Illumination’s Minion Land at Universal Studios Singapore, Singapore Oceanarium and The Laurus.
Adjusted EBITDA consequently increased 12.2% year-on-year, again supported substantially by lower net impairment on trade receivables.
New attractions cushion weaker tourism
For the first half, GenS’ revenue declined marginally by 0.9%, with gaming revenue down 4.2% while non-gaming revenue expanded 6.4%.
International tourist arrivals fell 6.6% year-on-year, although the impact was more than offset by contributions from the group’s new attractions as they progressively ramped up.
However, core net profit fell significantly faster than revenue, declining 29.5%.
HLIB attributed the sharper earnings contraction to higher depreciation expenses arising from the new attractions and lower interest income amid declining interest rates.
Weaker 2H expected
Looking ahead, HLIB expects GenS’ performance to weaken in the second half of FY2026.
The Singapore Tourism Board has indicated that macroeconomic uncertainties and capacity constraints arising from the Iran war could continue to weigh on travel demand.
This presents a near-term risk for GenS, particularly given its exposure to international tourism.
Management has also guided that operating costs are likely to remain elevated, adding further pressure to profitability.
“Taken together, we conservatively expect GenS to deliver a weaker performance in 2H26,” HLIB said.
The research house left its FY2026-28 earnings forecasts unchanged.
Dividend provides some support
GenS declared an interim dividend of 2.0 Singapore cents per share, unchanged from the corresponding quarter last year. The dividend is tax exempt and will go ex-dividend on 27 August 2026.
HLIB said the company’s projected FY2026 dividend yield of about 4.7% provides some support to the investment case despite the near-term uncertainty.
HLIB lowered its target price to SGD0.65 from SGD0.72, based on a lower enterprise value-to-EBITDA valuation multiple of 6.0 times, compared with 7.5 times previously.
The revised multiple represents 1.5 standard deviations below GenS’ three-year pre-pandemic average of 9.0 times, reflecting greater uncertainty surrounding travel demand in the second half of the year.
The multiple was applied to a rolled-forward FY2027 EBITDA forecast rather than FY2026.
HLIB said the lower valuation multiple mainly reflects uncertainty over tourism and travel demand, although this is partly mitigated by GenS’ attractive dividend yield and the decline in its share price since late February 2026.
“Overall, the cautious outlook is partly mitigated by GenS’s decent FY26 projected dividend yield of 4.7% and its share price decline since late February 2026, offering a more balanced risk-reward profile,” HLIB said.
It therefore reiterated its “Hold” call on the stock.
