Marina Bay Sands post-Covid results encouraging
U/G to BUY with a higher TP of SGD0.85 (+2%)
Our read of Marina Bay Sands’ 2Q22 results is positive for GENS’ RWS. Operations recovered faster-than-expected even without Chinese gamblers. We lift FY22E earnings for GENS by 78%. While our long-term
earnings estimates are little changed, there is room for positive earnings revisions if China eases its zero-Covid policy. We tweak our DCF-based TP to SGD0.85 from SGD0.83. With >10% upside potential, we upgrade GENS to BUY from HOLD. GENS will report 2Q22 results on 12 Aug 2022.
MBS 2Q22 results buoyed by high VIP win rate…
Las Vegas Sands (LVS US, CP: USD37.08, Not Rated) released Marina Bay Sands (MBS) 2Q22 results this morning. These results are significant as they reflect operations after Singapore reopened its borders on 1 Apr 2022 and axed Covid-19 testing requirements on 26 Apr 2022. MBS’ 2Q22 EBITDA of USD319m was buoyed by a high VIP win rate of 4.29% (Fig. 1). Adjusted for a normal VIP win rate, MBS 2Q22 EBITDA came in at USD278m which was still the highest since the Covid-19 pandemic began.
… but underlying operations recovering fast
In USD terms, MBS’ 2Q22 VIP volume/mass market GGR recovered to 75%/92% of 2Q19 levels (Fig. 2 & 3) largely due to the return of Malaysian and Indonesian gamblers. Though a quarter earlier than we expected, they are broadly in-line with our expectation that industry VIP volume/mass market GGR will recover to 75%/85% of 2019 levels in the long term. LVS stated that gaming operations will not return to 100% of 2019 levels until China relaxes its zero-Covid policy.
Lift FY22E earnings by 78%
We advise investors not to draw 100% identical comparisons with RWS. RWS likely ceded market share, albeit to pre-Covid levels, as Singapore reopened its borders (Fig. 4). Yet, we gather that 2Q22 ought to be
sequentially much better for RWS. We lift FY22E earnings by 78% to account for an earlier recovery (2Q22 from 3Q22) (Fig. 5). While FY23E and FY24E earnings are little changed, there is room for positive
revisions should China ease its zero Covid policy.