PETALING JAYA: The Genting group appears to be returning with a bang post-pandemic, going by Genting Singapore Ltd’s first quarter of financial year 2024 (1Q24) results.
The Singapore-listed company, which is 52.5% owned by Genting Bhd
, reported 1Q24 net profit of S$247.4mil, up 108.6% quarter-on-quarter and by 91.5% year-on-year (y-o-y).
Genting Singapore’s earnings beat most analysts’ expectations. This came on the back of stronger international visitor arrivals following several large-scale global music events held on the island-state as well as continued recovery of tourist arrivals, particularly from China.
On Bursa Malaysia, shares of Genting rallied 4.62% sen to RM4.76 per unit on expectations of a meaningful recovery in earnings. Meanwhile, subsidiary Genting Malaysia Bhd rose 3.42% to RM2.72.
Both the companies are slated to announce their results later this month.
Coming back to Genting Singapore, Hong Leong Investment Bank (HLIB) Research said the company’s recovery trajectory remains intact, driven by improvement in global flight connectivity and capacity, coupled with strong recovery in Chinese tourist arrivals.
“Post-annual report updates and higher international visitor arrival assumptions, we increase FY24 and FY25 forecasts by 12.2% and 35%, respectively.
“We also introduced FY26 projection with a 9.6% y-o-y growth in core profit after tax and minority interests,” the research firm said in a report.
It noted that the Singapore Tourism Board expects about 15 million international tourist arrivals in 2024 and this will undoubtedly boost traveller volumes and see a spillover effect for visitations to Genting Singapore’s Resorts World Sentosa.
Meanwhile, Maybank Investment Bank (Maybank IB) Research said that in 1Q24, the VIP win rate came in higher than expected.
”As we have posited for more than a year now, Genting Singapore benefited from the en masse return of Chinese visitors. Adjusted for normal VIP win rate, we expect 2Q24 to be seasonally slower but 3Q24 and 4Q24 to be seasonally stronger,” said Maybank IB Research.
Seeing it is still early in the year, the research firm said it is assuming full-year VIP win rates of 3% in the event future quarterly VIP win rates disappoint.
Following this, it has trimmed the company’s earnings estimates by 7%-8% to account for higher staff costs and slightly higher reinvestment rates via direct VIP rebates and promotional allowances.
In a recent report, S&P Global Ratings said the Genting group has recovered from the impact of the pandemic and operational improvements can be seen in all its geographies, including Malaysia and Singapore, while the US Resorts World Las Vegas also continued to ramp up its flagship asset at the Las Vegas Strip.
The rating agency said while Genting’s capital expenditure has remained limited since 2022, its operating cash flows are sufficient to meet the investment plans for the group over the next two years.
“However, any additional large investments to expand the geographical footprint could affect Genting’s deleveraging.”
