Genting Singapore (GENS) reported its 1Q21 business update. GENS’s revenue and net profit dropped 32% YoY and 26% YoY to SGD277.9m and SGD34.5m, respectively, dragged down by weaker gaming and non-gaming revenue due to a high base in 1Q20.

1Q21 adjusted EBITDA dropped 15% YoY to SGD128.1m, which we consider below expectations, weighed down by resurgence of Covid-19 cases in several of GENS’s key source markets.

The Singapore government announced tighter social distancing measures from 8-30 May to limit the potential spread of the pandemic amid higher infection rates.

While these measures could potentially weigh on GENS’s recovery trajectory, we believe the recovery in international travel demand in 2H21 remains intact and expect sequential recover in GENS’s performance. We continue to see GENS as a beneficiary of the rollout of vaccines and gradual easing of travel restrictions.

Factoring in a slower recovery, our fair value decreases from SGD1.02 to SGD0.96 which is based on 8.5x FY22F EV/EBITDA. BUY.

Source: OCBC Research - 12 May 2021