To The Moon

$GENTING SINGAPORE LIMITED(G13.SI)$ 

Genting Singapore reported its result on Monday, slightly upbeat compared to my expectation!

4Q22 result analysis

Genting Singapore generated S$543m in revenue for 4Q22, which was consistent with consensus estimates. Both gaming and non-gaming revenues have rebounded, reaching 96%/78% of pre-Covid-19 levels from 4Q19. Although there was a slight decline in gaming revenue due to a lower win rate, this was compensated by higher rolling volume.

For non-gaming revenues, the slower recovery of could be attributed partly to the ongoing renovation works at Festive Hotel, which is scheduled to reopen in May 2023 and will add 389 rooms to RWS's current estimated 1.2k rooms. Hotel occupancy was at 80%, and the average room rate was S$400.

In terms of adjusted EBITDA, Genting Singapore outperformed consensus 4Q22F estimates, with S$256.0m. This brought the FY22 adjusted EBITDA to S$774.2m. Although the EBITDA margin for the quarter declined by 0.8% points to 47.2%, the FY22 margin of 44.9% was well-controlled due to lower administrative, selling, and distribution expenses.

Recovery in-sight, but not coming through yet

Despite the reopening of key source markets such as China and Indonesia, Genting Singapore has observed that the frequency of flights to and from these countries is still low. The Singapore Tourism Board (STB) reported that as of Jan 23, flights to and from China were only at around 10% of pre-Covid-19 levels. Genting Singapore anticipates that these routes will recover to 70-80% of pre-pandemic levels by the end of the year, thereby increasing revenues.

Positive dividend surprise!

Genting Singapore pleasantly surprised its shareholders by announcing a $0.2 final dividend per share, which brought the full-year DPS to $0.3!

However, the management advised caution in considering this payout as the norm, emphasizing that the next Capex cycle would commence soon. RWS 2.0 is progressing and its opening will take place in stages starting in 2025, with completion scheduled for 2028. The initial cost of RWS 2.0, which was S$4.5bn, may increase, and the final figure will be disclosed once all approvals are finalized.

Conclusion: clear beneficiary from China reopening, but be careful of downside risk

Genting Singapore is expected to be a crucial reopening contender in the ASEAN region, with the rapid resumption of flight capacity from markets such as China and Indonesia would accelerate the recovery process for the Company.

However, take note there could be potential downsides such as expensive flight tickets dissuading price-sensitive tourists from returning, a recession that could dampen travel expenses, and delays in the RWS2.0 project.

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