Fair value S$1.47
add: 12m dividend forecast S$0.030
3Q13 as expected; but limited upside
Genting Singapore (GS) reported 3Q13 earnings (attributable to shareholders) of S$193.0m, versus our S$190m forecast, as both gaming and non-gaming segments performed better. Going forward, management has turned slightly more positive, as compared to the previous quarter, after seeing a better spread of VIP customers coming from SE Asia and not just China. It is also seriously exploring gaming and non-gaming opportunities in the region; and expects to announce something in the next 12 months. In line with the continued margin improvement, we up our DCF-based fair value from S$1.41 to S$1.47. But given the limited upside, we maintain our HOLD rating and would be buyers closer to S$1.40.
3Q13 earnings were within expectations
Genting Singapore (GS) reported its 3Q13 results last evening, with revenue climbing 16% YoY and 10% QoQ to S$776.8m, while adjusted EBITDA gained 15% YoY (+12% QoQ) to S$347.4m, as both gaming (saw higher volume in the premium player segment) and non-gaming (daily visitation exceeded 18k) segments performed better. As a result, net profit jumped 75% YoY and 38% QoQ to S$193.0m, versus our S$190m forecast. 9M13 revenue inched 1% lower to S$2154.4m, meeting 73% of our full-year forecast, while net profit also slipped 1% to S$449.1m, or 80% of our FY13 estimate.
Still looking towards Japan
Looking ahead, management has turned slightly more positive, as compared to the previous quarter, after seeing a better spread of VIP customers coming from SE Asia and not just China; although it notes that the global economic environment is still relatively unpredictable. Building on its track record (RWS has again been named the best IR for the 3rd consecutive year at the 23rd Annual TTG Travel Awards), GS says it is seriously pursuing opportunities in the gaming, leisure/entertainment and hospitality sectors in the region. Management believes that it could have something to announce within the next 12 months. Meanwhile, GS is also watching the developments in Japan closely and it expects the legislative passage of the IR Executive Law in early 2014.
Adjusting FV to S$1.47
With margins expected to stabilize from here as more of its non-gaming operations enter into steady state, we bump up our FY13 and 14 earnings forecasts by 2.5% while leaving our revenue numbers unchanged. Our DCF-based fair value also inches up from S$1.41 to S$1.47. But given the limited upside from here, especially after the pre-results run-up, we maintain our HOLD rating. We would be buyers closer to S$1.40.
Publish date: 05/11/13