Weak end to FY21 but not unexpected
Maintain HOLD call with a tad higher TP of SGD0.84
2H21 results were weak due to new COVID-19 cases surging in Singapore. Going forward, GENS expects its outlook to be better albeit from next year onwards. Our FY22E/FY23E earnings are little changed and we introduce FY24E earnings. The SGD4.5b RWS 2.0 reinvestment programme will proceed. Our DCF-based TP is raised a tad by 1cent to SGD0.84 on housekeeping. Maintain HOLD call as GENS indicated that it may be more progressive with dividends going forward.
Earnings and dividends within our expectations
2H21 core net profit of SGD38m (-80% YoY, -66% HoH) brought FY21 core net profit to SGD149.5m (+20% YoY), which was within our expectations at 94% of our FY estimate but below consensus’ expectations at 76% of consensus FY estimate. FY21 EBITDA of SGD448m (+5% YoY) was also inline with our expectations at 99% of our FY estimate. The proposed final DPS of 1cent was also in-line with our expectations at 100% of our FY estimate.
Gradually better outlook consistent with ours
With Singapore gradually reopening its borders, GENS is more confident on its outlook over the next 12 to 18 months. To be sure, GENS does not expect a marked improvement in FY22E but FY23E instead which is consistent with our view. Thus, our FY22E/FY23E earnings are little changed (-2%/-1%). We introduce our FY24E estimates which imply Resorts World Sentosa (RWS) total gross gaming revenue (GGR) recovering to 83% of FY19 levels then (VIP: 73%, mass market: 92%).
RWS 2.0 to proceed; to establish dividend policy
From 2Q22, Hard Rock Hotel Singapore, Hotel Michael and Festive Hotel will be progressively renovated (>1,200 rooms), Resorts World Convention Centre will be upgraded and construction of Minion Land and Singapore Oceanarium will commence. All in all, c.SGD400m relating to RWS 2.0 will be invested in FY22E. On another note, GENS intends to establish a dividend policy as it has no other major investment opportunities. We maintain our DPS estimates for now.