Towards Financial Freedom
Genting Singapore - Dividend boost in final quarter SELL
- Genting Singapore PLC's (GenS) FY12 results were below consensus expectations and our forecasts.
- GenS's EBITDA declined 17.4% YoY to S$1.36bil in FY12 on the back of an 8.4% fall in turnover and higher operating expenses relating to the Western Zone. EBITDA margin was at 46.4% in FY12 versus 52.2% in FY11.
- The drag on turnover resulted from a low win percentage in the premium players' segment. We estimate the win percentage of the high-rollers segment at 3% in FY12 versus 3.4% in FY11. On a quarterly basis, win percentage of the VIP segment inched up from 2.8% in 3QFY12 to 3.0% in 4QFY12.
- A positive note is the estimated 38% QoQ improvement in the volume of VIP business in 4QFY12. It appears that GenS had also enjoyed a similar surge in the volume of high-rollers business in 4QFY12, like Marina Bay Sands.
- We understand that GenS had new VIP customers in 4QFY12. The group is also confident that the volume of business in the high-rollers segment would improve in the coming 12-18 months although there may be volatility on a quarterly basis.
- Due to the QoQ jump in the volume of premium players business in 4QFY12, we believe that GenS' volume of VIP business in FY12 was relatively flat compared to FY11.
- We estimate GenS' market share of the rolling chip volume in Singapore at 47% in 4QFY12, which was the same as 3QFY12.
- GenS was more generous in granting credit in 4QFY12. As a result, receivables rose from S$699.7mil in 3QFY12 to S$959.5mil in 4QFY12. Impairment of trade receivables rose 34.7% QoQ to S$43.2mil in 4QFY12. Impairments amounted to S$143.0mil in FY12 versus S$121.1mil in FY11.
- GenS is keen to pursue casino opportunities in Japan but not in South Korea. This is because only tourists are allowed to enter casinos in South Korea and not locals. Management is optimistic that lawmakers in Japan would try to put through a casino bill in the fall session this year.
- As for the new hotel at Jurong Town Hall Road, we understand that it would be completed in 1QFY15. Construction cost of the hotel is expected to be less than S$150mil.
Source: AmeSecurities
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