Friday, November 13, 2015

Genting Singapore

Genting Singapore: 3Q15 results were appalling. Net profit plunged 62% to $37.2m, as FX gains ($113m) were offset by fair value losses of investments of $71.7m, and record bad debt charges of $92.5m (2Q15: $56.6m).
Consequently, adjusted EBITDA fell 18% to $209.2m, with EBITDA margin at 32.9% (-0.6 ppt q/q).

Revenue fell 1% to 636.1m, as gaming ($451.8m, -5%) weakness was offset by non-gaming revenue ($183.9m, +10%)

In gaming, VIP volumes halved y/y (-7ppt q/q), contrary to expectations that volumes would pick up at RWS, based on the MBS read through. This was as RWS did not extend much credit to Chinese VIPs. Win-rate, however, improved to 2.8% (2Q: 2.1%). VIP market share was 40%, flat q/q

Mass GGR fell 6% y/y (-1% q/q) despite Genting Jurong Hotel room inventory growing by 36% since opening seven months ago. In fact, the hotel might be boosting non-gaming revenue instead, which saw 17% increase in visitations. Mass market share fell 3ppt q/q to 40%.

Looking forward, management will be less generous in extending credit to Chinese VIPs, while expects provisions to remain high until 2Q16. On that end, GENS reiterates its aim to drive visitations from ASEAN.

Soil works has begun in Jeju, the soft opening of the Resorts World Jeju is expected at end 2017. Meanwhile, management also cited its optimism for the passage of the gaming bill in Japan.

GENS is currently trading at 8.9x EV/EBITDA.

Latest broker ratings:
Credit Suisse maintains Outperform with TP of $1.00
Nomura maintains Neutral with TP of $0.89
Morgan Stanley maintains Overweight with TP of $0.85
CIMB maintains Hold with TP of $0.81
Maybank-KE downgrades to Hold from Buy, cuts TP to $0.78 from $0.82
JP Morgan maintains Underweight, cuts TP to $0.70 from $0.77

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