Genting Singapore Continues To Enjoy Recovery Story in Q4

Genting Singapore’s G13 decent fourth-quarter results were in line with our expectations, which continue to reflect a solid recovery, driven by pent-up demand from gamblers in Southeast Asia, who have responded to the easing of entry restrictions to Singapore. With the tourism traffic and airline capacity continuing to recover—particularly the gradually normalizing travel between China and Singapore—we expect Singapore casinos to extend robust growth momentum in the next two years. We maintain our assumption of Genting’s gross gaming revenue returning to 90% of 2019′s level in 2023, and to 110% in 2024. We raise our fair value estimate for Genting Singapore to SGD 0.94 per share from SGD 0.92, after rolling our model one year forward. Our tweaks of our forecasts are minor, and we expect the company’s adjusted EBITDA to rise 21% and 12% year over year to SGD 935 million and SGD 1.1 billion in 2023 and 2024, respectively. We think the shares are fairly valued as of market close on Feb. 22.

Fourth-quarter revenue rose 108% year over year to SGD 542 million. Adjusted EBITDA came in at SGD 256 million, up sharply from SGD 69 million a year ago, and tracking 89% of 2019 levels. This is slightly lower than peer Marina Bay Sands, whose adjusted EBITDA rebounded to 95% of its 2019 level. We think local demand, and the increased travel by tourists between ASEAN partners, particularly Malaysia and Indonesia, were the key drivers for improved visitor traffic to the casinos in 2022. The reopening of China to international travelers from Jan. 8, and the resumption of group tours from Feb. 6, would further improve visitor traffic to Singapore until a full recovery by the end of 2024. China has been a key revenue source for Singapore casinos, which we estimate contributed about 30% of Singapore’s gaming revenue during the prepandemic period.