Overview:
Maybank, despite revising downwards its profit estimates for Genting Singapore post the 4Q23 results, maintains an optimistic outlook for the company’s prospects in 2024. Analyst Samuel Yin Shao Yang acknowledges challenges faced in the last quarter but underscores the operational recovery and potential growth drivers.
Revised Estimates:
Maybank’s latest estimates adjust the 2024 EBITDA down by 6% to SG$1.17 billion and core net profit estimate by nearly 12% to SG$775 million. The adjustments account for higher impairment of trade receivables and depreciation, influenced by Genting Singapore’s 4Q23 performance.
4Q23 Performance:
Genting Singapore’s 4Q23 EBITDA saw a significant decline of 34% quarter-on-quarter, primarily attributed to increased impairment of trade receivables, penalties, and write-offs related to a major hotel brand. Despite an improved VIP win rate, non-gaming revenue also dropped by 10% quarter-on-quarter due to seasonality factors.
Reasons for Optimism:
Yin maintains a “BUY” rating on Genting Singapore’s stocks, highlighting the expectation that impairment of trade receivables will not be as substantial as in 4Q23, and recent penalties and write-offs won’t recur. The mutual waiver of visa requirements between Singapore and China is expected to boost Chinese visitation, reducing the need for marketing expenses.
Future Prospects:
Maybank underscores its confidence in Genting Singapore’s operational recovery, despite revising the price target down to SG$1.16 from SG$1.21. This revised target still represents an increase from the previous closing price of SG$1.03.
Maybank’s outlook on Genting Singapore remains positive despite adjustments in profit estimates. The focus lies on operational improvements, potential growth drivers, and favorable market dynamics, especially with the expected increase in Chinese visitation.