Genting Singapore (GENS SP): Reopening postponed and not cancelled

  • RE-ITERATE BUY Entry – 0.78 Target – 0.86 Stop Loss – 0.74
  • Genting Singapore is best known for its award-winning flagship project Resorts World Sentosa, one of the largest fully integrated destination resorts in South East Asia. Genting Singapore is one of the constituent stocks of the FTSE Straits Times Index. 
  • Delayed not cancelled. Shares of Genting Singapore dropped more than 10% since the Omicron variant wreaked havoc on global risk assets. Reopening plays were hit particularly hard as governments imposed new mandates. 
  • This shall pass. After a little more than two weeks since Omicron’s discovery, early data from the epicentre in South Africa indicates that the virus appears to be spreading faster but does not appear to be causing severe disease. We think once the Winter Covid-19 surge starts to abate going into 1Q 2022, governments are likely to continue with their reopening plans. 
  • Consensus estimates provide for upside potential. Consensus estimates are not very high for the company, thus presenting an opportunity for the company to beat estimates especially on pent up demand for travelling and leisure activities. There are currently 9 BUYS vs 9 HOLDS and 1 SELL rating. The 12m average TP of S$0.92 still implies a 17% potential upside. Earnings are expected to recover to around 70% of pre-pandemic levels next year.