Maybank lowers profit forecast for Genting Singapore

Analysts said Q3 results were below expectations.

Singapore.- Analysts at Maybank have lowered their net profit forecasts for Genting Singapore by 16 to 17 per cent for the 2024, 2025 and 2026 financial years. Following the financial report for the third quarter, they said the company hadn’t met expectations due to a decline in VIP gaming volumes and an increase in bad debts associated with Chinese players.

For the fourth quarter, analysts anticipate stable EBITDA at around SG$225m (US$169.5m) as seasonal decreases in visitor numbers may be balanced by reduced bad debts due to tighter credit policies.

Core net profit for the first nine months of the year was down 11 per cent year-on-year to SG$450m (US$338.9m), representing 63 per cent of the company’s projected full-year earnings. VIP gaming volume was SG$26bn (US$19.5bn). That’s an 8 per cent increase year-on-year but only 66 per cent of the goal for the year.

Analysts noted that the majority of VIP gambling debts from Chinese accounts cannot be enforced in China. Meanwhile, both the VIP and mass market sectors showed signs of weakness, with Genting warning that VIP volumes may continue to fall due to economic uncertainties in China. In the third quarter, VIP volume dropped by 2 per cent sequentially, totalling SG$7.7bn (US$5.8bn).

Gross gaming revenue from the mass market segment, which has a higher EBITDA margin of about 60 per cent, declined by 6 per cent quarter-on-quarter, despite an increase in tourism.  This drop was partially attributed to the closure of the Hard Rock Hotel, which is expected to reopen in the first quarter of 2025.

Moody’s affirms A3 credit rating for Genting Singapore

Moody’s Investors Service has affirmed Genting Singapore‘s credit rating at A3, indicating upper-medium grade and low credit risk. The outlook for the company remains stable. Analysts said Upward movement of the rating was unlikely, “given Genting Singapore’s small scale compared with its global peers and its concentration in Singapore.”

Moody’s expects the company’s earnings before interest, taxation, depreciation and amortisation (EBITDA) to reach SG$1.2bn (US$906.8m) this year, reflecting a slight increase as demand has softened amid economic uncertainty. Analysts noted that the casino operator’s operational capacity has temporarily fallen due to the closure of a hotel for renovations. They forecast that EBITDA will grow to SG$1.3bn in 2025 as new attractions open gradually.

Moody’s noted that Genting Singapore is modernising offerings at Resorts World Sentosa (RWS) as part of its casino licence extension until 2030, with an investment of SGD6.8bn: “Although the amount is significant, the capital expenditure will be spread across multiple years, peaking at an estimated SG$1bn per annum between 2027 and 2029.”