Maybank says it remains optimistic about Resorts World Sentosa operator Genting Singapore’s 2024 prospects, despite trimming its profit estimates after the company’s 4Q23 results came in below expectations.
In a note, Maybank analyst Samuel Yin Shao Yang lowered his 2024 EBITDA estimates by 6% to SG$1.17 billion (US$871 million) and core net profit estimate by almost 12% to SG$775 million (US$578 million), citing “higher impairment of trade receivables, and depreciation and amortisation”.
In doing so, he noted that Genting Singapore’s 4Q23 EBITDA of SG$227.8 million (US$170 million) had represented a 34% quarter-on-quarter decline even with an improved VIP win rate. The decline was due to a combination of higher impairment of trade receivables, penalties and write offs relating to a major hotel brand and marketing expenses to attract more international visitors, he said. Non-gaming revenue was also down 10% quarter-on-quarter on seasonality.
Nevertheless, Yin maintained a “BUY” rating on the company’s stocks, noting that such impairment of trade receivables is not expected to be as large as in 4Q23 going forward, while recent regulatory penalties and other write-offs will not recur.
An increase in Chinese visitation since Singapore and China mutually waived visa requirements for each other’s citizens on 9 February should also reduce the need for marketing expenses.
“We still like Genting Singapore for its operational recovery,” Yin wrote.
Maybank has set a price target of SG$1.16 on Genting Singapore shares, down from a previous target of SG$1.21 but higher than Friday’s closing price of SG$1.03.