• 4Q NPAT hit by lower win rate
• 2015 outlook remains challenging
• Value emerging around S$0.95 or better

Poorer 4Q14 showing

Genting Singapore (GS) reported a poorer-thanexpected set of 4Q14 results last night, with revenue down 8% YoY (-1% QoQ) at S$637.9m, still hit by the slide in China inbound visitors (gaming revenue down 9% YoY and 3% QoQ; non-gaming fell 4% YoY but +5% QoQ). Again, due to a lower-than-expected win rate of 2.2% (versus the 2.85% theoretical hold rate for its VIP business), adjusted EBITDA slipped 24% YoY and QoQ to S$194.6m. As a result, reported NPAT fell 36% YoY and 8% QoQ to S$89.2m. For the full-year, revenue inched up 1% to S$2862.5m, but was 5% below our forecast, while reported NPAT slipped 12% to S$517.3m, nearly 10% below our estimate. GS declared a final dividend of S$0.01/share, unchanged from last year.

Expects VIP volumes to remain weak

Going forward, GS foresees significant challenges for the Asian gaming and tourism industry, which continues to be impacted by the developments in China (slower economic growth, anti-graft drive etc). While GS expects bad debt provisions to remain relatively high in the near term, it believes that these will start to normalize due to its more prudent credit policy. And to make up for the likely weak VIP volumes, GS says it will continue to target the mass premium market, focusing on visitors in the surrounding region. And with the 550-room Jurong Hotel slated for a soft opening in Apr (full launch in Jun), GS is hopeful that it can attract as much as 1.5k additional daily visitors to its IR this year.

Maintain HOLD with new S$1.03 fair value

In view of the latest results as well as the still muted outlook for the VIP segment, we opt to pare our FY15 estimates for revenue by 12% and NPAT by 23%, preferring to err on the side of caution. Having said that, our DCF-based fair value improves slightly from S$1.01 to S$1.03 as we include some contribution from its Jeju IR from FY17 onwards. Maintain HOLD and believe that value is emerging around S$0.95 or better.

Source: OCBC Research - 25 Feb 2015