• Genting Singapore's FY20 adjusted EBITDA of S$427m beat our and consensus FY20F forecasts of S$354m and S$340.0m, respectively, on higher 4Q adjusted EBITDA margins.2H20 adjusted EBITDA margin was a stellar 58.5%, likely aided by some provision write-backs, in our view.
• Final dividend of S$0.01/share was the only disappointment.
• 2H20’s results show Genting Singapore’s resilience. It is also still flush with cash. Reiterate ADD, with a higher target price based on 9.5x CY22F EV/EBITDA.

Ending on a Good Note; Propelled by Better 2H20 EBITDA Margins

• Genting Singapore (SGX:G13)'s 2H20 revenue of S$615.5m (-49% y-o-y) was a sequential improvement from 1H20’s S$448.2m, due to 4Q20 revenue (S$314.5m) that grew ~4.5% q-o-q on the back of higher non-gaming revenue as we think domestic school holidays and the inability to travel overseas spurred staycations and park visitation.
• FY20F revenue of S$1.06bn (-57.1% y-o-y) was within our expectations. However, 2H20 adjusted EBITDA margin of ~58.5% (vs. 2H19: 47%/FY19: 48%) was a surprise.
• Genting Singapore's 4Q20 adjusted EBITDA margin of above 60%, likely due to a combination of JSS support schemes and provision reversals (trade receivable impairments saw a write-back of S$22.8m in FY20), helped spur FY20F adjusted EBITDA of S$427m, ahead of both our and street’s forecast.
• Final dividend of S$0.01/share was disappointing (FY19: S$0.04/share).

Heartening Stats

• Genting Singapore's 2H20’s gaming revenue (post Phase-2 in Singapore) accounted for 57% of 2H19’s gaming revenue, which is encouraging considering the lack of tourists that were the main targets of both Singapore casinos previously.
• We think the stronger revenue could also be due to Genting Singapore’s higher market share in 2H20 (VIP volume market share was 53%, while mass GGR market share was 44%).
• We fine-tune our FY21-22F adjusted EBITDA and earnings per share forecasts due to slightly higher revenue and EBITDA growth and introduce our FY23F forecasts. We estimate FY21F/FY22F adjusted EBITDA could be ~66%/82% of FY19’s as tourism returns gradually over the next two years.

RWS 2.0 and Japan IR Plans Still Delayed

• Genting Singapore has guided that construction on RWS 2.0 has been delayed, with design revisions to adapt to a post-pandemic environment.
• For Japan, there has not been a formal Request-for-Proposals (RFPs) yet.

Reiterate ADD; Strong Cash Pile

• Genting Singapore’s further recovery relies on Singapore’s borders tough times.
• We reiterate our ADD call and raise our 12-month target price to S$1.05, now based on 9.5x CY22F EV/EBITDA (close to FY12-20 mean), as we like its medium-term prospects and strong balance sheet.
• Potential re-rating catalysts include a quicker recovery in Singapore’s tourism.
• Downside risks are vice-versa.

Source: CGS-CIMB Research - 10 Feb 2021