Genting Singapore (GS) could see a near-term sell-down as its FY11 earnings of S$1,011.1m (+55%) were 12% below Bloomberg consensus; but were still 9% above our forecast. Market may also be disappointed to learn that GS has again lost market share to Marina Bay Sands, including the VIP market share due to its exceptionally high hold rate in 4Q11; although it has managed to maintain its profitability. Nevertheless, GS believes that quality of the VIP customers are more important than quantity; and expects to attract more high rollers with its newly-opened luxurious Beach Villas. We maintain our BUY call with S$2.02 fair value, given its strong cash-flow generating ability, which increases the odds of a higher dividend this year. As a recap, GS declared an unexpected final dividend of S$0.01 for FY11.
FY11 earnings +55% to S$1,011.1m
Genting Singapore (GS) saw 4Q11 revenue inch up 0.5% YoY (but slipped 2% QoQ) to S$786.3m, with revenue growth coming mainly from its non-gaming segment. Net profit grew 180% YoY and 21% QoQ to S$254.6m. For FY11, revenue climbed 18% to S$3,223.1m, or 2.5% below our estimate, while reported net profit jumped 55% to S$1,011.1m, or 9.4% above our forecast. GS also declared a final dividend of S$0.01 per share.
Still losing market share
On a comparable basis, GS appears to still be losing market share to rival Marina Bay Sands (MBS), which we estimate commanded around 57% of overall gaming market (based on gross gaming revenue) in 2011. We understand GS also lost market share in the VIP segment (rolling chip volume down 26% QoQ) due to its exceptionally high hold rate of 3.9% (versus MBS’ 3.3%). Nevertheless, GS was able to keep up with MBS in terms of adjusted EBITDA margin, which came in around 52.0% versus MBS’ 52.9%.
New West Zone to attract VIP market
However, GS believes that quality of the VIP customers are more important than quality, and is looking to target more high rollers from both Asia and Eastern Europe with its swanky new 172-room Equarius Hotel and the 22 Beach Villas in the West Zone. Meanwhile, GS is also more cautiously optimistic about the high roller market in 2H12 as it expects the EU crisis to exert a smaller impact on the Asian economies. But GS notes that 2012 will be a “transition year” where it will incur a lot of expenses with zero revenue with the opening of new attractions like its Marine Life Park.
Expect near-term sell-down; maintain BUY
FY11 earnings were 12% below Bloomberg consensus, and we could see a near-term sell-down; but we maintain our BUY call with S$2.02 fair value, given its strong cash-flow generating ability, which increases the odds of a higher dividend this year.
Genting Singapore (GS) saw 4Q11 revenue inch up 0.5% YoY (but slipped 2% QoQ) to S$786.3m, with revenue growth coming mainly from its non-gaming segment. Net profit grew 180% YoY and 21% QoQ to S$254.6m. For FY11, revenue climbed 18% to S$3,223.1m, or 2.5% below our estimate, while reported net profit jumped 55% to S$1,011.1m, or 9.4% above our forecast. GS also declared a final dividend of S$0.01 per share.
Still losing market share
On a comparable basis, GS appears to still be losing market share to rival Marina Bay Sands (MBS), which we estimate commanded around 57% of overall gaming market (based on gross gaming revenue) in 2011. We understand GS also lost market share in the VIP segment (rolling chip volume down 26% QoQ) due to its exceptionally high hold rate of 3.9% (versus MBS’ 3.3%). Nevertheless, GS was able to keep up with MBS in terms of adjusted EBITDA margin, which came in around 52.0% versus MBS’ 52.9%.
New West Zone to attract VIP market
However, GS believes that quality of the VIP customers are more important than quality, and is looking to target more high rollers from both Asia and Eastern Europe with its swanky new 172-room Equarius Hotel and the 22 Beach Villas in the West Zone. Meanwhile, GS is also more cautiously optimistic about the high roller market in 2H12 as it expects the EU crisis to exert a smaller impact on the Asian economies. But GS notes that 2012 will be a “transition year” where it will incur a lot of expenses with zero revenue with the opening of new attractions like its Marine Life Park.
Expect near-term sell-down; maintain BUY
FY11 earnings were 12% below Bloomberg consensus, and we could see a near-term sell-down; but we maintain our BUY call with S$2.02 fair value, given its strong cash-flow generating ability, which increases the odds of a higher dividend this year.
No comments:
Post a Comment