Maybank IB Research has upgraded Genting Singapore from “Hold” to “Buy” as the company’s flagship integrated resort, Resorts World Sentosa (RWS), prepares for a capacity boost at the end of the month.
Under Singapore’s Phase 3 reopening plan, RWS will be allowed to increase its operating capacity from 50% to 65% as of 28 December 2020, while Prime Minister Lee Hsien Loong has also expressed a desire to explore the opening of borders to certain countries from early 2021.
With Genting Singapore having surprised in 3Q20 by reporting a profit of SG$54.4 million (US$40.4 million) – reversing a loss of SG$163.3 million (US$121.2 million) in the previous quarter – Maybank analyst Samuel Yin Shao Yang said the company was well placed to continue its positive momentum.
“Genting Singapore’s 3Q20 earnings outperformance was largely based on 25% operating capacity,” Yin said. However, “attractions were allowed to increase operating capacity to 50% from 18 September 2020 onwards.
“RWS casino was also open to all guests from 9 October 2020 onwards (previously only to Genting Rewards members). Thus, 4Q20 earnings ought to be better quarter-on-quarter.”
Yin also noted that Singapore expects to have its entire population vaccinated within 2021, which will help instil confidence in Singaporeans to visit RWS again as the year progresses.
With Malaysia, China and Indonesia – which together account for around 80% of VIP GGR and 50% of mass market GGR at RWS – among the nations in line to be granted early access to Singapore, Yin said earnings estimates look strong.
Maybank is predicting VIP gaming will recover to 50% of pre-COVID levels in 2021 and 75% in 2022, while mass is tipped to reach 75% next year and a full recovery by 2022.
