- Our read of Marina Bay Sands’ 2Q22 results is positive for Genting Singapore (SGX:G13)’s Resorts World Sentosa (RWS). Operations recovered faster-than-expected even without Chinese gamblers.
- We lift FY22E earnings for Genting Singapore 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.
MBS 2Q22 Results Buoyed by High VIP Win Rate…
- Las Vegas Sands (LVS US) 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 US$319m was buoyed by a high VIP win rate of 4.29%. Adjusted for a normal VIP win rate, MBS 2Q22 EBITDA came in at US$278m which was still the highest since the COVID-19 pandemic began.
… But Underlying Operations Recovering Fast
- In US$ terms, MBS’ 2Q22 VIP volume/mass market GGR recovered to 75%/92% of 2Q19 levels 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 Genting Singapore's FY22E Earnings by 78%
- We advise investors not to draw 100% identical comparisons with Resorts World Sentosa (RWS). RWS likely ceded market share, albeit to pre-COVID levels, as Singapore reopened its borders. Yet, we gather that 2Q22 ought to be sequentially much better for RWS.
- We lift FY22E earnings forecast for Genting Singapore by 78% to account for an earlier recovery (2Q22 from 3Q22). While FY23E and FY24E earnings are little changed, there is room for positive revisions should China ease its zero COVID policy.
- We tweak our DCF-based target price for Genting Singapore to S$0.85 from S$0.83. With more than 10% upside potential, we upgrade Genting Singapore to BUY from HOLD.
- Genting Singapore will report 2Q22 results on 12 Aug 2022.
Source: Maybank Research - 21 Jul 2022
