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Dragged down by Delta in 3Q21

Maintain HOLD call and SGD0.86 DCF-based TP

3Q21 results were weak but expected as new COVID-19 cases surged in Singapore. We trim our EPS estimates by 5-9% on lower interest income but leave our EBITDA estimates largely unchanged. While we expect 4Q21 to be similarly weak, we expect FY22E to be better due to the return of Malaysian gamblers. Singapore and Malaysia will launch a vaccinated travel lane on 29 Nov 2021. Yet, we opine that this news has already been priced in. Maintain HOLD call and SGD0.86 DCF-based TP.

3Q21 results weaker YoY & QoQ but not unexpected

3Q21 core net profit of SGD26.0m (-64% YoY, -61% QoQ) brought 9M21 core net profit to SGD137.5m (+1294% YoY) which was within our expectations despite coming in at 81% of our FY estimate. We expect 4Q21 core net profit to be similar to 3Q21, bringing FY21 core net profit to SGD160m- SGD170m. 9M21 revenue of SGD806.3m (+8% YoY) was within our expectations at 72% of our FY estimate. No dividend was declared in 3Q21 but we expect GENS to declare a final DPS of 1cent in 4Q21.

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4Q21 may be similarly weak…

3Q21 results were weak largely due to new COVID-19 cases in Singapore rising. Given that new COVID-19 cases in Singapore remain elevated, we gather that 4Q21 results may be similar to that of 3Q21 (Fig. 2). We trim our FY21E/FY22E/FY23E EPS a tad by 7%/9%/5% on lower interest income after GENS paid SGD880m to acquire land to commence construction of the SGD4.5b RWS 2.0 expansion plan. That said, our EBITDA estimates are largely unchanged. Hence, our SGD0.86 DCF-based TP is unchanged.

… but SG-MY VTL a step in the right direction

Despite the weak 3Q21, we expect FY22E to be better due to the return of Malaysian gamblers. We gather that Malaysians accounted for 20-30% of VIP volume and 30-40% of mass market GGR pre-COVID-19. Singapore and Malaysia will launch a vaccinated travel lane (VTL) between Changi Airport and Kuala Lumpur International Airport on 29 Nov 2021. We hope that the
VTL will be the first step to other entry points being reopened to Malaysians (e.g. Seletar Airport, Causeway and Second Link).