Genting Singapore’s Q4 Missed; Lifting of Travel Restrictions Drives Upside in 2022

Hindered by ongoing COVID-19 restrictions, Genting Singapore’s fourth-quarter results missed our expectations. Net revenue improved 3.8% to SGD 165 million from a quarter ago, boosted by seasonally stronger non-gaming sales, while gaming revenue fell 15% sequentially and adjusted EBITDA fell to SGD 69 million, from SGD 103 million in the third quarter and SGD 220 million a year ago, due to a series of enhanced safety measures to address the omicron risks. Although the near-term outlook is unlikely to surprise on the upside, a recovery is on track, especially as border restrictions continue to relax. We lower our 2022 EBITDA forecast by 14% to SGD 779 million to reflect a soft first-quarter outlook, while we maintain both our midcycle earnings forecast and our fair value estimate of SGD 0.90 per share. The shares are slightly undervalued presently. In addition, we also think management’s guidance for an uptick in dividend payouts in 2022 will help to support the share price.