Genting Singapore (GENS SP) Beneficiary of relaxed pandemic restrictions
• 4Q21 performance weighed by lower gaming revenue
• A final dividend of 1 S cent per share declared
• Estimated SGD400m capex in 2022
4Q21 adjusted EBITDA missed on lower gaming revenue ? Genting Singapore’s (GENS) 4Q21 revenue and adjusted EBTIDA dropped 17% YoY and 67% YoY to SGD261.0m and SGD69.4m, respectively, weighed down by lower gaming revenue (-23% YoY, -15% QoQ). This was due to a net outflow of gamers during the festive holiday season and enhanced safe management measures due to the outbreak of the Omicron variant during the quarter. The decline in revenue was partially offset by higher non-gaming revenue (+7% YoY, +62% QoQ), which was boosted by healthy staycation demand. Net profit fell 74% YoY to SGD34.4m in 4Q21. A full-year dividend of 1 S cent per share was declared, same as last year.
Commencement of RWS 2.0 in 2H 2022 ? Management shared that RWS 2.0 will commence in 2H22 and is likely to complete by 2024. Total capex is estimated to be SGD4.5b. GENS will also make use of the current lull period from the pandemic to renovate and refresh its hotel offerings progressively from 2Q22. A total amount of SGD400m will be invested in 2022 for RWS 2.0 and related refurbishment works. As of 31 Dec 2021, GENS had SGD3.3b of cash, and management mentioned that they are likely to review its dividend policy to reward shareholders.
Singapore’s reopening plan remains on track ? Singapore recently announced further reopening plans which included relaxed pandemic restrictions and expanded Vaccinated Travel Lanes (VTLs) to new destinations such as Hans Kong and Philippines. In addition, quotas for VTLs which were previously halved due to the Omicron wave will also be fully restored. We view this as positive and expect to see further calibrated steps towards reopening which will aid the recovery of GENS. However, the reopening of China, which is a key market of GENS, remains uncertain. We adjust our estimates as we expect the recovery in FY22 to be more gradual, but we are hopeful of a stronger performance in FY23. After adjustment, our fair value estimate decreases from SGD0.94 to SGD0.90.
ESG Updates
According to research, Genting Singapore Ltd (GENS) lags its global peers on governance. GENS has related party transactions with the controlling shareholder, Genting Overseas Holdings Limited (52.8% votes held). GENS demonstrates initiatives to mitigate the effects of problem gambling such as advertisements, self-exclusion and voluntary visit limit options. However, unlike better-performing peers, there is no evidence of play safe limits such as voluntary money and time limit settings. BUY. (Chu Peng)