Genting Singapore’s (GENS) provided its 3Q20 business update. Revenue fell 50% YoY to S$301.0m, but improved over 100% on a QoQ basis, driven by a strong recovery across all key business segments.

Despite travel restrictions and capacity constraints, 3Q20 adjusted EBITDA swung back into a profit of S$149.0m (-46% YoY) from a loss of S$84.9m in 2Q. The performance came in above ours and Bloomberg consensus’ expectations on better-than-expected recovery trajectory due to strong pent-up demand from local traffic.

With a more stabilised infection rate in Singapore, GENS could benefit from potential easing of social distancing measures as Singapore enters Phase 3 and support from government on domestic tourism.

Pfizer’s announcement of favourable phase 3 data on its Covid-19 vaccine is positive to GENS, and this was reflected in the strong share price rebound of GENS. The announcement from Moderna on its 95% effective Covid-19 vaccine could further grow the confidence and drive the recovery.

We revise our FY20/21F EBITDA forecasts by 400%/59% on better outlook and sentiment. Our fair value hence increases from S$0.68 to S$0.96 which is based on 8.5x FY21F EV/EBITDA. Upgrade from Hold to BUY.

Source: OCBC Research - 18 Nov 2020