Maybank downgrades Genting Singapore profit forecast

Maybank Investment Bank has cut its profit forecast for Genting Singapore by 12 per cent, citing the slow pace of recovery in Chinese tourist arrivals.

Singapore.- Analysts at Maybank Investment Bank have reduced their predictions for Genting Singapore‘s 2023 profit by 12 per cent to SGD637m (US$472m). Analysts have also revised downward their forecast for earnings before interest, taxation, depreciation and amortisation (EBITDA) by 14 per cent but maintain a positive outlook.

Samuel Yin Shao Yang noted that Chinese visitor arrivals, a key factor for Genting Singapore’s performance, were just 20 per cent of 2019 levels in the first five months of 2023. Yang believes there is room for improvement in operating metrics as seat capacity from China recovers.

Yang expressed optimism for 2024, anticipating a return to pre-pandemic levels. Although EBITDA margins might be slightly lower than anticipated, absolute EBITDA is projected to recover during the financial year. 

Yang based this forecast on communication with management, indicating that all major operating metrics, such as VIP volume, mass tables gross gaming revenue (GGR), slot machine GGR, and non-gaming revenue are trending higher quarter-on-quarter. High-margin slot machine GGR continues to grow, primarily driven by local customers.

While non-gaming revenue experienced a decline of 15 per cent quarter-on-quarter in the first three months of the year, attributed to Singaporeans traveling abroad during the school holidays, Yang said non-gaming revenue is now recovering.

For the first quarter of 2023, Genting Singapore reported a 45 per cent rise in gaming revenue when compared to last year. In quarter-on-quarter terms, the SG$339.9m (US$255m) total was down 8.6 per cent.

The company posted revenue of SG$484.5m (US$363m), up 54 per cent year-on-year and down 10.7 per cent sequentially. Net profit after taxation was SG$129.2m (US$96.9m), up 220 per cent year-on-year and up 7.8 per cent from the previous quarter.

See also: RWG visitor numbers to fully recover in 2024, analysts say