Following the tripling of Genting Singapore&rsquo s (GENS) earnings for the 1HFY2023 ended in June at $1.08 billion, analysts at Citi Research and Maybank Securities remain positive on the integrated resorts operator as a post-Covid-19 recovery play.

 

Both George Choi from Citi and Yin Shao Yang from Maybank have maintained their &ldquo buy&rdquo calls, with a higher target price of $1.26 from Choi, and an unchanged target price of $1.12 for Yin.

 

GENS&rsquo luck-adjusted 2QFY2023 ebitda amounted to $201 million, which was largely in line with Citi&rsquo s forecasts.

 

With a 25% growth in its revenue q-o-q to $596 million in this second quarter, adjusted property ebitda increased 36% to $261 million, representing about 89% of 2QFY2019 levels, according to Choi from Citi.

 

&ldquo Had Resorts World Sentosa (RWS) held normally, its gross gaming revenue (GGR) would have improved about 3% q-o-q to $548 million. We believe that the beat also has to do with 31% q-o-q improvement in non-gaming revenues.&rdquo he adds.

 

This is driven by increased attractions&rsquo attendance and spend per customers, thanks to GENS marketing and promotional efforts. RWS presented a series of events and performances in 1H2023 including the LIV golf event in Singapore and Aaron Kwok&rsquo s Amazing Kode World Tour 2023 concert, Choi adds.

 

&ldquo Guests will also see the return of Halloween Horror Nights 11 at Universal Studios in September, and management is keeping an eye on investment opportunities in Thailand,&rdquo says Choi.

 

GENS 2QFY2023 reported numbers also suggest that RWS&rsquo gaming trends were largely solid, according to Choi, where VIP volumes rose 13% q-o-q.

 

Choi notes that no single country has dominated the VIP volume improvement, where RWS is no longer dominated by mainland Chinese visitors anymore as foreign visitor arrivals into Singapore continued to improve.

&ldquo We forecast that Singapore&rsquo s gaming industry ebitda will stay at about $3.3 billion per annum at a normal GGR year in the medium term. The Singapore gaming market and GENS (the only pure Singapore gaming play) could appeal to investors who are looking for a defensive shelter in volatile markets. Furthermore, we believe that the new phase for RWS could helps GENS retrieve its earnings growth.&rdquo Choi says.

 

Choi&rsquo s $1.26 target price is derived from assigning equal weights to equity values derived from their sum-of-the-parts and discounted cash flow model (DCF) valuation methodologies. He values the Singapore casino at 10x FY2024 ev/ebitda.

 

Similarly, Maybank&rsquo s Yin expects 2HFY2023 to be &ldquo even better&rdquo on seasonally more visitors from China, as July&rsquo s seat capacity from China to Singapore has recovered to 74% of pre-Covid-19 levels.

 

Yin notes that GENS&rsquo 2QFY2023 core net profit of $160.6 million brought 1HFY2023&rsquo s core net profit to $291.8 million which was within his expectations at 46% of the FY estimate.

 

While the first interim dividend per share (DPS) of 1.5 cents accounted for only 38% of his FY estimate, Yin says this is in-line with his expectations as GENS traditionally declares more DPS in the 2H.

 

Likewise, Yin says that RWS&rsquo recovery operations has been broad based, not driven just by the return of Chinese visitors, but also the return of Southeast Asian visitors from Indonesia and malaysia.

 

&ldquo Thus, we believe that RWS is better positioned to withstand any potential deceleration in the Chinese economy than say the Macanese integrated resorts,&rdquo he adds.

 

Finally, Yin says that RWS traditionally welcomes more visitors in Jul and Aug due to summer holidays in the northern hemisphere. As GENS notes that Chinese visitors are starting to return en masse, the analyst expects GENS&rsquo 2HFY2023 to perform better h-o-h.

 

&ldquo On that note, we maintain our earnings estimates and $1.12 DCF-based target price,&rdquo says Yin.

 

GENTING Singapore : G13 0% posted a net profit of S$276.7 million for the six months ended Jun 30, 2023, more than three times the S$84.4 million in earnings in the same period a year ago.

 

This came on the back of a 62.9 per cent increase in revenue to S$1.1 billion over the same period, from S$663.1 million a year ago.

 

In a bourse filing on Thursday (Aug 10), the company attributed the better performance to a higher number of foreign visitor arrivals into Singapore, even as limited air capacity from certain regional countries and higher airfares impacted leisure travel.

 

At the property level, Genting Singapore noted that Resorts World Sentosa (RWS) delivered 37 per cent higher adjusted earnings before interest, tax, depreciation and amortisation of S$268.4 million quarter on quarter in the second quarter of 2023.

 

&ldquo The better performance was a result of the rebound in non-gaming business, a higher-than-theoretical VIP win rate and recovery in regional gaming business,&rdquo the company said. It also said that on a hold-normalised basis, gross gaming revenue rose 3 per cent quarter on quarter to S$547.9 million, near pre-pandemic levels in 2019.

 

&ldquo Non-gaming revenue improved 31 per cent quarter on quarter to S$188.7 million due to improved attractions&rsquo attendance and spend per customer, driven by intensified marketing and promotional efforts,&rdquo the company added.

 

An interim dividend of S$0.015 per share was declared for the half year ended June 30, 2023, up from the S$0.01 per share dividend declared for the same period a year ago. It will be paid out on Sep 22, 2023.

 

As for its outlook, the company said that it is targeting to begin construction on areas such as the new Waterfront building, Equarius Hotel extension and the new Health and Wellness Centre in 2024, following government approvals.

 

Meanwhile, in a separate bourse filing, RWS announced the appointment of Lee Shi Ruh as president of RWS from Sep 1, 2023.

 

Lee will report to RWS chairman and chief executive Tan Hee Teck and assist him in overseeing operations, managing RWS&rsquo financial affairs, as well as shaping and developing RWS&rsquo people and culture strategy. She has close to 30 years of experience in the leisure and gaming industry, and has served as Genting Singapore&rsquo s chief financial officer as well as RWS&rsquo chief people officer.