Maintain HOLD call and tweak TP to SGD0.86 (+2%)
With borders reopening earlier than expected, we raise our FY22E/FY23E
earnings by 163%/123%. Yet, our FY24E earnings are barely changed (-2%)
as we doubt gaming operations will recover to 100% of pre-COVID-19
levels. We tweak our DCF-based TP to SGD0.86 from SGD0.84. Maintain
HOLD. We have also introduced an expanded ESG tear sheet for GENS and
assigned it an above average overall score of 80, based on its aggregated
quantitative/qualitative/target-based metrics.
South East Asia has reopened for travel…
As Singapore (SG), Malaysia (MY) and Indonesia (ID) reopened their borders
(SG & MY: 1 Apr 2022, ID: 22 Mar 2022) coupled with SG axing pre- and
post-arrival testing on 26 Apr 2022, 2/3 to 3/4 of SG’s FY19A gaming
market has returned. Our channel checks note a discernible rise in tourists
in SG since. Thus, we bring forward our forecast that RWS’ VIP volume will
recover to 83% of FY19A levels to mid-FY22E from FY24E and RWS’ mass
market GGR will recover to 92% of FY19A levels to FY23E from FY24E (Fig.
1). These raise our FY22E/FY23E earnings by 163%/123%.
… but China has changed the Asian gaming landscape
Yet, our FY24E earnings are barely changed (-2%). We doubt SG and RWS’
VIP volume will recover to 100% of FY19A levels due to China (CN)
outlawing cross-border gambling punishable by ?10 years’ imprisonment
from Mar 2021. We also doubt that SG and RWS’ mass market GGR will
recover to 100% of FY19A levels as Macanese, Philippine and Cambodian
integrated resorts (IR) negatively impacted by the above will try to draw
premium mass gamblers that frequent SG IRs to compensate (link).
Potential Thai IRs raises questions on RWS 2.0
Moreover, Thailand (TH) is mulling legalising IRs (link). We doubt TH IRs
will draw away many MY and ID gamblers due to deep personal and
commercial ties to SG but gather that they will draw away many CN mass
gamblers (c.1/3 of FY19A SG mass market GGR). Even without IRs, a
whopping 11m Chinese visited TH in 2019 (SG: 3.6m). Should TH IRs
materialise, we would wonder how financially viable the SGD4.5b RWS 2.0
expansion will be (SGD929.1m invested as at end-4Q21).