Disappointing quarter with odds against them

• 3Q24 revenue of SGD562mn (-19% y/y) and adjusted EBITDA of SGD164mn (-53% y/y)
• 9M24 revenue/adjusted EBITDA at SGD1,918mn/SGD735mn accounting for 69%/64% of our FY24F estimate, missing expectations
• Poor performance largely attributable to lower VIP rolling volume and below-trend win rate
• Expect normalising win rate and increased hotel room capacity and new attractions to improve profitability for next year Maintain BUY, TP under review

What&rsquo s New

Genting Singapore (GENS) reported 3Q24 revenue of SGD562mn and adjusted EBITDA of SGD164mn, representing a decline of 19% y/y and 53% y/y, respectively. The top-line decline was primarily driven by a 28% y/y drop in gaming revenue due to lower VIP rolling volume of SGD7.7bn (-32% y/y) and a lower win rate of 2.45% in 3Q24 versus 3.19% in 3Q23. This was marginally offset by a 1% increase in non-gaming revenue, which continues to be impacted by the ongoing RWS renovation. In particular, the company saw reduced sales from its food and beverage (F& B) outlets. On EBITDA, we believe the significant decline was primarily due to operating deleverage resulting from lower VIP gaming revenue. Assuming a normalised win rate, hold-adjusted EBITDA would have amounted to around SGD221.4mn, representing a smaller but still notable drop of 31% y/y.

Our Views
9M24 adjusted EBITDA of SGD735mn accounted for 64%/66% of DBS/consensus FY24F estimates, missing expectations. Even after adjusting for a normalised luck factor, 9M24 adjusted EBITDA would be around SGD792mn, or 69% of our estimates, still falling short of projections. Despite being a seasonally strong quarter with higher tourist arrivals, mass gaming volumes were largely flat q/q, while VIP volumes dipped slightly by approximately 2.3%. We believe this may be due to a shift in tourist demographics, with more visitors fitting the mass-market gaming profile rather than VIP clients, alongside a decline in visitation from the Chinese market, which constitutes GENS&rsquo primary customer base. Supporting this view, Marina Bay Sands, a peer, also reported a significant 20% y/y decline in VIP rolling volumes but saw a more moderate 4% y/y reduction in mass gaming volumes in Q3 2024, suggesting a broader trend towards a mass-market tourist mix. Management reaffirmed that VIP volume could remain soft in the near term given the macroeconomic backdrop in China, but mass gaming remains resilient. Overall, we believe the company could see a y/y profitability uplift next year from a normalising win rate and the completion of certain RWS renovations. Maintain BUY TP under review.

The announcement comes months after MacDonald said he was issued a persona non grata notice, which banned him from Marina Bay Sands&rsquo premises

 

SHARES of Genting Singapore : G13 +1.18% were heavily traded on Monday (Nov 4) morning after it announced that Andrew MacDonald, chief casino officer and director at Resorts World Sentosa (RWS), has stepped down.

 

The counter gained 1.8 per cent or S$0.015 to S$0.86 shortly after the market opened. The last time it traded at such levels was in October this year.

 

By 10.47 am, Genting Singapore was one of the most actively traded counters by both volume and value. Its shares were trading up 1.2 per cent or S$0.01 at S$0.855, with 14.6 million shares worth S$12.4 million changing hands.

 

In a bourse filing on Saturday, the mainboard-listed company said MacDonald stepped down, effective Nov 1, to &ldquo pursue personal interests&rdquo . MacDonald, 64, had been responsible for overseeing the overall business of RWS.

 

The announcement came months after MacDonald said he was issued a persona non grata notice, which banned him from Marina Bay Sands&rsquo premises. The ban was for alleged attempts at poaching high-rollers.

 

MacDonald, a veteran casino gaming executive, was an employee of MBS for almost 12 years. He was executive vice-president of casino operations at MBS from 2010 and became chief casino officer for MBS parent Las Vegas Sands in 2012.

 

He left MBS in July 2021 and joined RWS in September 2022 as chief casino officer, after a non-compete clause in his separation agreement expired.