• Strong op. performance continues
• FV increases to S$1.35
• Re-iterate BUY

Adjusted EBITDA Up 37% YoY

Genting Singapore (GS) posted another strong set of quarterly results this year. 3Q17 revenue increased 8% YoY to S$629.9m or 26.2% of our full-year forecast, supported by an 11% increase in gaming revenue on the back of stronger VIP and premium mass business volume. Non gaming revenue remained healthy with the attractions business clocking higher average visitor spend and a 5% growth in daily average visitorship.

GS’s hotels also recorded a more than respectable occupancy rate of 93%, significantly higher than the industry average. 9M17 revenue came up to 75.3% of our full-year forecast.

With an improved operating margin and lower net impairment on receivables, 3Q17 adjusted EBITDA increased 37% YoY to S$320.1m or 28.6% of our full-year forecast, at the higher end of our expectations. 3Q17 net profit attributable to ordinary shareholders jumped 35% YoY to S$143.8m.

Better Volume From Both VIP and Premium Mass

The gaming segment has seen better volume from both the VIP as well as premium mass business. As for the non-gaming segment, we note that the Maritime Experiential Museum will have a soft opening during the Christmas holiday season. Visitors can also look forward to eating at the fine dining restaurant, Teppan by Yonemura, which will also be opening.

Notably, events such as “RWS Street Eats” as well as “The Great Food Festival” have managed to attract a collective ~170k visitors. We believe the success of such activities as well as future events of a similar kind will help to further bolster RWS’s attractiveness as a lifestyle destination.

Re-iterate BUY

We continue to project strong EBITDA growth for the remaining quarter of the year. Looking forward to 2018, we expect GS to continue to enjoy top-line growth stemming from a steadily recovering gaming sector, higher operating margins, as well as manageable receivable impairments.

Note that gross profit margins have improved QoQ for six quarters, from 19.3% in 2Q16 to 48.3% in 3Q17. In terms of financing activities, GS has redeemed its S$1.8b 5.125% perpetual securities in Sept.

It has also raised 20b yen in a JPY-denominated Samurai bond in Japan following the establishment of their Japan branch office. After making adjustments, our FCFE-based fair value from S$1.32 to S$1.35. We re-iterate BUY.

Source: OCBC Research - 7 Nov 2017