Genting Singapore (GS) reported a better-than-expected set of 2Q13 results, with adjusted EBITDA margin recovering back to 44% from 37.3% in 1Q13. 1H13 revenue met around 50% of our full-year forecast, while net profit was nearly 64% of our FY13 figure. Going forward, management still remains slightly cautious about the slower growth outlook for China; but notes that it has yet to see much impact on its Chinese customers. Given the slightly better-than-expected showing, we opt to raise our net profit forecasts for FY13 and FY14 by around 3.5% each; but this has little impact on our DCF-based fair value, which remains at S$1.41. Given the limited upside from here, we maintain HOLD. Longer-term catalyst could come from a potential IR license overseas in markets like Japan, which is still a 2015 or 2016 story.
Better-than-expected 2Q13 results
Genting Singapore (GS) reported 2Q13 revenue of S$707.9m, +0.8% YoY, where the non-gaming segment saw a healthy 19% growth, which offset a 2.4% drop in the casino business (affected by lower win percentage of 2.51% (versus 2.85% theoretical) despite a 30% jump in rolling volume). Nevertheless, adjusted EBITDA margin recovered to 43.9% in the quarter, compared to 37.3% in 1Q13 and 44.3% in 2Q12. For 1H13, revenue fell nearly 7% to S$1377.6m, meeting 50.3% of our FY13 forecast, while net profit slipped some 26% to S$256.1m, but still met 63.8% of our full-year forecast.
Looking to drive foreign visitor arrivals
Going forward, management remains slightly cautious about the slower growth forecast for the Chinese economy, although GS notes that it has not seen any impact on its Chinese customers; but it will continue to monitor the situation. Separately, GS has embarked on a focused strategy to drive more foreign visitor arrivals to deliver volume mass market play, which typically yields better margins compared to the VIP segment. It also intends to focus on growing its non-casino business, where we believe operations should be entering a steady state. In 2Q13, Universal Studios saw 10k daily visitors with an average spend of S$83, while Marine Life Park welcomed 9k visitors with a S$26 average spend.
Maintain HOLD with unchanged S$1.41 fair value
Given the slightly better-than-expected showing, we opt to raise our net profit forecasts for FY13 and FY14 by around 3.5% each; but this has little impact on our DCF-based fair value, which remains at S$1.41. Given the limited upside from here, we maintain HOLD. Longer-term catalyst could come from a potential IR license overseas in markets like Japan, which is still a 2015 or 2016 story.
Genting Singapore (GS) reported 2Q13 revenue of S$707.9m, +0.8% YoY, where the non-gaming segment saw a healthy 19% growth, which offset a 2.4% drop in the casino business (affected by lower win percentage of 2.51% (versus 2.85% theoretical) despite a 30% jump in rolling volume). Nevertheless, adjusted EBITDA margin recovered to 43.9% in the quarter, compared to 37.3% in 1Q13 and 44.3% in 2Q12. For 1H13, revenue fell nearly 7% to S$1377.6m, meeting 50.3% of our FY13 forecast, while net profit slipped some 26% to S$256.1m, but still met 63.8% of our full-year forecast.
Looking to drive foreign visitor arrivals
Going forward, management remains slightly cautious about the slower growth forecast for the Chinese economy, although GS notes that it has not seen any impact on its Chinese customers; but it will continue to monitor the situation. Separately, GS has embarked on a focused strategy to drive more foreign visitor arrivals to deliver volume mass market play, which typically yields better margins compared to the VIP segment. It also intends to focus on growing its non-casino business, where we believe operations should be entering a steady state. In 2Q13, Universal Studios saw 10k daily visitors with an average spend of S$83, while Marine Life Park welcomed 9k visitors with a S$26 average spend.
Maintain HOLD with unchanged S$1.41 fair value
Given the slightly better-than-expected showing, we opt to raise our net profit forecasts for FY13 and FY14 by around 3.5% each; but this has little impact on our DCF-based fair value, which remains at S$1.41. Given the limited upside from here, we maintain HOLD. Longer-term catalyst could come from a potential IR license overseas in markets like Japan, which is still a 2015 or 2016 story.
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