Maintain HOLD call with lower TP of SGD0.83 (-3%)

1Q22 results were below our expectations. That said, we gather that it
was due more to non-cash depreciation. More importantly, EBITDA was
within our expectations. Going forward, Singapore’s reopened borders
ought to translate into better future quarterly earnings. Thus, we
maintain our earnings estimates. Yet, we are wary that long term
earnings will be stifled by Thailand which is mulling integrated resorts.
Trim DCF-based TP by 3% to SGD0.83 from SGD0.86.

Net profit below but EBITDA within our expectations

1Q22 core net profit of SGD43.5m (-2% YoY, +263% QoQ) was below our
/consensus expectations at 17%/13% of our/consensus FY estimate. Yet,
1Q22 EBITDA of SGD124.8m (-3% YoY, +80% QoQ) was within our
expectations at 22% of our FY estimate. We gather that the earnings
shortfall was due to higher-than-expected depreciation caused by
accelerated depreciation of certain assets ahead of GENS’ SGD4.5b ‘RWS
2.0’ reinvestment programme.

Future quarters ought to be gradually better

At first glance, 1Q22 EBITDA of SGD124.8m appears slightly below our
expectations. That said, we gather that business will gradually improve
after 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. Barring a full blown global
recession, we opine that future quarterly earnings ought to be gradually
better than that of 1Q22. Thus, our earnings estimates are unchanged.

Trim TP by 3% to reflect risk from Thailand

Yet, we are wary that long term earnings will be stifled by Thailand
which is mulling legalising integrated resorts (IR). A 60-member
extraordinary committee examining the feasibility of opening IRs in
Thailand will submit its report (which is already prepared) to the House
Of Representatives (HOR) very soon (HOR reconvenes on 22 May 2022).
Thus, we raise our Beta to 1.4x from 1.3x and thus, raise our WACC to
11.6% from 11.0% and trim our DCF-based TP by 3cents to SGD0.83.