Genting Singapore

Genting Singapore: 4Q15 missed by a huge margin, plunging to net loss of $7.8m from $89.2m profit a year earlier, in contrast to profit forecasts by the entire street.

The dismal performance was marred by falling VIP volumes (-40%), poor win rate (2.1%), losses from divestment of available-for-sale financial assets ($79.8m) and FX ($22.9m), as well as higher finance expenses of $14.5m (+49%).

Revenue fell 14% to $547.4m (-14%), with both gaming ($374m) and non-gaming ($173m) businesses suffering declines.

In gaming, both VIP and mass saw worse operating statistics. Rolling chip volume shrank 40% to $8.8b, with a smaller win rate of 2.1% (3Q15: 2.8%) and market share of 38% (-2ppt q/q), while mass GGR dropped 10% to $385m with flat sequential market share of 40%.

Non-gaming revenue dipped 2% to $173m despite record visitations at Universal Studio Singapore.

Adjusted EBITDA fell at a slower pace to $181.3m (-5%) due to efficiency enhancements. A notable good news is that bad debt provision was pared to $45.3m (-45%), an intra-year low, and a stark improvement from a record $92.4m in 3Q15.

GENS appears to be cleaning up its operations and balance sheet. Trade and other receivables was stable q/q but 26% lower y/y at $894.9m. It has substantially disposed all of its portfolio investments ($1.31b), leaving only $207.3m available-for-sale financial assets on the balance sheet.

Management does not expect VIP volume to fall much more, despite being cautious on extending credit to VIPs.
On the South Korean front, construction of the Jeju resort has begun. For the residential plot, management is expecting to commence sales in 2Q16.

Despite the red ink, the group has proposed a higher first and final DPS of 1.5¢ (FY14: 1¢).

GENS is currently trading at 15.5x EV/EBITDA, which is still pricey relative to Macau peers.

Latest broker ratings:
Credit Suisse maintains Outperform with TP of $1.00
UOB KayHian maintains Buy with TP of $0.97
Morgan Stanley maintains Overweight, but cuts TP to $0.80 from $0.85
Nomura maintains Neutral, with TP of $0.80
CIMB upgrades to Add from Hold, raises TP to $0.80 from $0.73
Maybank KE maintains Hold with TP of $0.78
JPMorgan maintains Underweight with TP of $0.70
OCBC maintains Sell with TP of $0.69
Deutsche Bank maintains Sell with TP of $0.50