Target Price Unchanged at SGD0.80 But Downgrade to HOLD

• Resorts World Sentosa (RWS) has reopened but we gather that operations will take more time to recover. We now forecast Genting Singapore (SGX:G13)'s FY20E net loss of SGD214.6m (SGD49.4m net profit previously), cut our FY21E net profit by 43% but tweak our FY22E net profit up by 2%.
• Utilising a lower WACC of 13% (15% previously), our Target Price is relatively unchanged at SGD0.80. With < 10% upside potential, we downgrade Genting Singapore to HOLD. In our view, Genting Singapore's share price may have peaked for now.

RWS Reopens With Slim Pickings From Local Market

• After being closed for nearly three months, RWS reopened on 1 Jul 2020. With Singapore’s borders still effectively shut, the gamblers who have been patronising RWS since it reopened are effectively all Singaporean citizens and permanent residents.
• Coupled with social distancing requirements, we estimate that the current VIP volume and mass market GGR may come in at only ~1/8 and ~1/4 of pre-closure levels respectively.

International Market Will Take Time to Recover

• In our view, Indonesians are unlikely to return soon as the COVID-19 pandemic is worsening in Indonesia. That said, we believe that Malaysians are likely to return soon as the COVID-19 pandemic has been contained in Malaysia. We are uncertain about Chinese returning soon given broad caution about reopening borders, even in the case of ‘green lanes’. Hence, we deem it likely that Malaysians will return in volume first, with Chinese visitor arrivals to remain low for an extended period.

FY20E to be Loss-making But Still Expect Dividends From Genting Singapore

• By market, we gather that the mass market will recover faster than the VIP one as the former is geared more towards locals and Malaysians from the nearby hinterland.
• Anticipating a slower recovery, we now forecast FY20E net loss of SGD214.6m (SGD49.4m net profit previously), cut our FY21E net profit by 43% but tweak our FY22E net profit up by 2%. That said, we maintain our DPS forecast at 4 cents p.a. as we opine that Genting Singapore’s huge net cash position enables it continue paying dividends.

Source: Maybank Kim Eng Research - 23 Jul 2020