Genting Singapore’s fourth-quarter shortfall prompts Morgan Stanley to lower its 2024 forecasts

A recent report from Morgan Stanley Asia Ltd suggests that Genting Singapore Ltd, the casino operator, fell short of analysts’ expectations in its fourth-quarter results, mainly due to various exceptional items.

Genting Singapore disclosed earnings before interest, taxes, depreciation, and amortization (EBITDA) of US$241 million for the final quarter of 2024, which did not align with the analyst consensus range of US$260 million to US$290 million.

Despite EBITDA receiving a boost from a VIP win rate exceeding expectations at 3.6 percent, analysts Praveen Choudhary and Gareth Leung noted that several one-off items affected the overall performance. These items were particularly significant in the fourth quarter of 2023, with a higher provision of US$56 million compared to US$16 million in each of the first and second quarters.

The exclusion of these one-off items from the analysis provided a clearer picture of the company’s performance. However, it’s important to note that the fourth-quarter figures shouldn’t be considered the new norm for Genting Singapore. The analysts justified the higher provision due to the doubling of VIP rolls year-on-year in 2023.

Furthermore, non-gaming EBITDA in the final quarter of 2023 decreased by 30 percent quarter-on-quarter due to seasonal impacts affecting volume and margin.

In addition to the provision, there were other exceptional items amounting to SGD30 million (US$22.5 million) in the fourth quarter of the previous year, including one-off costs related to cash bonuses and hotel negotiations that might not recur in 2024.

Morgan Stanley revised its 2024 estimates downward for Genting Singapore’s net revenue and EBITDA by 6 percent and 7 percent, respectively, considering renovation disruptions expected during the expansion of the complex.

Despite the adjustments, Morgan Stanley remains optimistic about the company’s future, predicting annual growth in earnings and dividends from 2024 to 2026. This growth is expected to be driven by increasing visitor arrivals to Singapore, supported by visa-free travel arrangements with China, improved air capacity, and new attractions at Resorts World Sentosa in 2025.

Genting Singapore reported an annual net profit of nearly SGD611.6 million for full-year 2023, with revenue increasing by 40.1 percent year-on-year to just below SGD2.42 billion.

The company’s ongoing expansion projects at Resorts World Sentosa, including Universal Studios Singapore’s Minion Land and the Singapore Oceanarium, are progressing as planned, with a soft opening expected in early 2025.

Original Story by: GGRAsia