Genting Singapore profits to rise 7% in 2018

Analysts are excited by its bid for a Japanese casino.

In 2018, Genting Singapore will once again spin the wheel of fortune, but this time it could hit jackpot. Earnings are expected to launch into a recovery and rise 7% YoY, DBS Equity Research said.

DBS analyst Mervin Song noted that that the progress made for Japan casino with Sentosa redevelopment is still under discussions with the authorities. “Genting guided that the Integrated Resort (IR) execution bill should be introduced in the current Diet session over the coming month or so. Should be the bill be passed, the bill may still take some time to pass the upper house. However, Genting remains positive on the potential for eventual bidding of an IR in Japan in 2019 with Osaka a location the group is interested in building an IR. Meanwhile, there were no further updates on the potential redevelopment of its Resorts World Sentosa (RWS) property.”

Song added that underpinning the sustained recovery is a 10% increase in rolling chip volumes. “This is up from our previous forecast of 7% given a stronger USD-SGD exchange rate 1.35 versus 1.37 previously as Genting selectively extends credit to its VIP customers. However, we expect the mass business to remain flat YoY.”

With the increase in earnings, dividends could rise to 4 cents up from 3.5 cents in 2017. Meanwhile, VIP rolling chip and mass business are expected to increase to rise 3% YoY in 2019.

“Based on a slight tweak in our assumptions, we changed our 2018/2019F adjusted EBITDA by -1/+2% with our FY18/19F normalised profit higher by 3%/7% on reduced interest costs due to lower than expected borrowings,” Song added.

Lady Luck wasn’t on Genting Singapore’s side as profits fell 29% YoY from $188.99m to $133.99m in the fourth quarter of 2017. However, revenue rose 4% due to the stronger underlying performance of the leisure and hospitality segment as a result of higher business volume.

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