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Genting Singapore - Within Expectations

kiasutrader
Publish date: Fri, 21 Feb 2014, 02:58 PM
Genting  Singapore's  FY13  core  earnings  of  SGD619.0m  were  in  line. Management,  however,  has  turned  cautious  on  its  FY14  outlook  on  a potential  slowdown  in  its  VIP  segment  due  to  the  Chinese Government's move to improve its system of governance.  We make no changes  to  our  FY14F  and  FY15F  estimates  for  now.  Maintain NEUTRAL, with our SOP-based FV tweaked to SGD1.44 (from SGD1.49).
  • Within  expectations.  FY13  revenue  dipped  3.4%  y-o-y  to  SGD2.8bn despite record-high  VIP volume (+36.0% y-o-y) due to  poor luck factor  -its  VIP  win  rate  averaged  at  2.5%  against  the  theoretical  hold  rate  of 2.8%.  The  company's  core  EBITDA,  meanwhile,  fell  to  SGD1.2bn  (-14.9%  y-o-y)  due  to  higher  opex,  while  its  impairment  loss  on receivables  surged  29.3%  y-o-y  to  SGD184.9m.  All  in,  FY13's  core earnings  of  SGD619.0m  were  in  line,  at  98.3%  and  101.5%  of consensus  and  our  full-year  estimates  respectively.  In  4Q13,  revenue was  down  10.8%  q-o-q  and  12.5%  y-o-y  to  SGD692.9m,  while  core earnings fell to SGD121.8m (-48.2% q-o-q; -25.2% y-o-y). A final DPS of 1.0 cent was declared, in line with our previous guidance.
  • Turning  slightly more cautious.  Management  has  turned  cautious  on its  outlook  for  FY14  in  view  of  the  Chinese  Government's  move  to improve  its  existing  system  of  governance.  This  could  potentially dampen  cash  liquidity  at the company's  VIP segment.  Its  management has also  guided  that the  continued weakness in regional currencies  vs the  SGD  may  potentially  lead  to  slower  growth  for  its  mass  market segment,  as  tourists  might  defer  their  plans  to  travel  to  Singapore.
  • Elsewhere,  it  is  looking  to  fork  out  initial  capital  of  USD300m  for  its proposed  integrated  resort  in  Jeju  Island,  South  Korea.  The  group  will submit an application for an integrated resort licence in due course.
  • Maintain  NEUTRAL.  While  we  make  no  changes  to  our  FY14F  and FY15F  estimates,  our  SOP-based  FV  is  revised  to  SGD1.44  (from SGD1.49) as we update our model following the release of  the group's full-year results.  Our valuation,  premised  on  a 11.0x FY14 EV/EBITDA, is  at  a  25% discount to Genting Singapore's Macau gaming peers  given the more stringent regulatory control in the  Singapore's gaming industry. Given the limited upside, we maintain our NEUTRAL call.



Financial Exhibits

SWOT Analysis
  • Operates Resorts World Sentosa in Singapore, one of the two casinos in the country

Company Profile
Genting Singapore owns and operates Resorts World Sentosa (RWS).  Singapore's first integrated resort,  RWS  cost  over SGD6.5bn and sits on a 49-hectare site on the island of Sentosa.

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Source: OSK
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