Genting Singapore shares are undervalued despite drop in earnings, Morningstar says
Morningstar's senior equity analyst, Jennifer Song, has a fair value estimate of S$0.96 for Genting Singapore shares. The stock last closed at S$0.715 on Thursday (May 15). As at 10.04 am on Friday, it was up 0.7 per cent or S$0.005 at S$0.72.
Genting Singapore's results were largely in line with analysts and market expectations, Song said in a Morningstar report on Thursday.
Genting Singapore reported a sharp year-on-year revenue decline of 20 per cent to S$626.2 million from S$784.4 million in the year-earlier period. Net profit tumbled 41 per cent to S$145 million from S$247.4 million the year before.
'However, the results reflect a sharp year-on-year decline in revenue and net profit due to a high base a year ago and ongoing renovation disruptions from its RWS 2.0 project, which will continue to weigh on second-quarter performance,' Song wrote.
Genting on Wednesday attributed the weaker performance to lower VIP rolling win rate and temporary closure of Hard Rock Hotel for renovation and rebranding works, which led to a reduction in available room inventory.
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Additionally, the decline in financials was weaker compared with the previous year where Singapore had more visitors during the Chinese New Year festive season along with the relaxation of visa regulations between China and Singapore in February 2024.
However, Morningstar's Song expects earnings growth to pick up from the second half of 2025, on the back of the commencement and ramp-up of new projects and attractions. This includes the launch of a superluxury all-suite hotel, the Singapore Oceanarium, and expanded retail and dining options.
'Although Genting has been losing gross gaming revenue market share to peer Marina Bay Sands in recent years, we anticipate the phased launch of its RWS 2.0 attractions to accelerate revenue growth and expand margins from the second half of 2025,' said Song.
In a bourse filing on Wednesday, Genting Singapore also announced that chief executive officer Tan Hee Teck will be stepping down from his role on May 31.
Shares of Genting-linked companies in Malaysia fell on Thursday as investors digested the surprise CEO exit at Genting Singapore and fresh concerns over corporate governance.
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