Nomura lowers GEN Singapore estimates on Covid setbacks
Brokerage Nomura says it was lowering its 2021 earnings estimates for casino operator Genting Singapore Ltd, following that company’s “weak” first-quarter results. In a Wednesday memo, the institution said it had reduced its adjusted earnings before interest, taxation, depreciation and amortisation (EBITDA) forecast for Genting Singapore by 15 percent, for full years 2021 and 2022.
Genting Singapore is the operator of Resorts World Sentosa (pictured in a file photo), one of Singapore’s two casino resorts. The firm is a subsidiary of Malaysian conglomerate Genting Bhd.
Nomura said the revised forecast took into consideration “seasonal weakness, tapering government support for wage subsidy,” and “recent return to a ‘stricter’ phase 2 of Covid-19 containment measures, as well as setbacks in managing Covid-19 across several Asian countries recently.”
The brokerage cited Malaysia as an example, where a third round of so-called movement control order protocols was imposed this week by the country’s government as a Covid-19 countermeasure. Nomura said such setbacks “dim the prospect of a significant inbound tourism recovery for Singapore in 2021.”
Genting Singapore reported a net profit of SGD34.5 million (US$25.9 million) for the first quarter of 2021, down 73.7 percent from the previous quarter. The firm recorded adjusted EBITDA of SGD128.1 million for the period, 39.4-percent down on the last quarter of 2020.
Nomura analysts Tushar Mohata and Alpa Aggarwal suggested in Wednesday’s note that it expected Genting Singapore to record an average quarterly EBITDA run rate of SGD133 million in full-year 2021, down 37 percent from fourth-quarter 2020. The final quarter of last year included some one-off items, such as wage subsidies, impairment reversals and bonus reversals.
The brokerage said it also expected the casino firm to pay a dividend per share of SGD0.02, SGD0.03, and SGD0.04 in the years 2021, 2022 and 2023, respectively. “Genting Singapore has the balance sheet to support a higher payout given the slow progress in Singapore capital expenditure (RWS2.0),” said Nomura.
That was a reference to the previously-announced expansion of Resorts World Sentosa, involving a capital expenditure budget of SGD4.5 billion.
“We stick to our current delayed timeline for capital expenditure roll out for RWS2.0, with the completion now modelled in fiscal-year 2027,” stated the Nomura team.
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