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

Genting Sing (G13)

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