HLIB Research said GenS’ recovery trajectory remained intact and is expected to deliver improved results in 2024 as compared to last year.
PETALING JAYA: Genting Bhd
is expected to benefit from the recovery of its 52.7%-owned subsidiary, Genting Singapore (GenS), which is on track to deliver stronger earnings this year.
This is driven by rising tourist arrivals in Singapore, particularly from China, as well as various programmes and events aimed at boosting visitorship and spending at Resorts World Sentosa (RWS) in the city-state.
Hong Leong Investment Bank (HLIB) Research noted GenS’ core net profit of S$460.2mil, up 41.9% year-on-year, in the first half of 2024 (1H24) was in line with its expectations, making up 53.4% of its full-year forecasts, but exceeded consensus estimates, accounting for 63.2% of full-year forecasts.
The brokerage stated GenS’ recovery trajectory remained intact and is expected to deliver improved results in 2024 as compared to last year.
“GenS should continue its positive recovery momentum benefitting from recovery in foreign tourist arrivals in Singapore, particularly from Chinese tourists, as well as differentiated programmes and events to be unveiled in 2H24 and early-2025,” HLIB Research said.
It noted that the Singapore Tourism Board in May revised up its 2024 international tourist arrival forecast range to 15 million to 16.5 million from 15 million to 16 million previously. This was mainly underpinned by improved global flight connectivity and capacity, as well as the mutual 30-day visa exemption between Singapore and China from Feb 9, 2024.
“Besides, RWS will roll out four global blockbuster intellectual property partnerships, that is, Mega Minions from Illumination’s Despicable Me 4, Genshin Impact, Sweet Home and Harry Potter: Visions of Magic (Asian debut) in 2H24,” HLIB Research said.
“Lastly, the first phase of RWS 2.0, comprising Illumination’s Minion Land and the Singapore Oceanarium remains on track for a soft opening in early-2025. We believe these differentiated programmes and events will help to boost both visitorship and spending at RWS,” it added.
HLIB Research maintained its “buy” call on GenS, with a higher target price of S$1.45, up from S$1.32 previously, based on enterprise value per earnings before interest, tax, depreciation and amortisation (ebitda) multiple of nine times.
Meanwhile, Public Investment Bank (PIB) Research reiterated “outperform” on Genting, with a higher sum-of-parts-based target price of RM6, up from RM5.80 previously, after rolling over the valuation base year to 2025.
On GenS, the brokerage said, RWS should continue to benefit from higher visitation and tourism activities, particularly after the relaxation of visa regulations between China and Singapore.
“Although Chinese tourists entering Singapore has been rising gradually, it hasn’t rebounded to pre-pandemic levels,” it noted.
In 2023, Singapore received 1.36 million Chinese tourists, which was only 38% of 2019 or 10% of total tourist arrivals for the year (Chinese tourists used to account for about 20% of total arrivals prior to the pandemic).
“Fortunately, this has recovered to 18% year to-date, though total arrivals remain below 2019,” PIB Research said, adding it estimates GenS accounts for about 40% of Genting group’s total adjusted ebitda.
