Genting Singapore Shares Gain After 3Q Earnings Beat

Shares were 11% higher at 94 Singapore cents (74 U.S. cents) at the noon break Tuesday, the first trading session since Genting Singapore released its third-quarter results. The gains, which would mark the biggest one-day rise in more than three years if they hold, nearly erased the stock’s losses for the year.

Genting Singapore’s quarterly revenue rose 33% on year and 16% sequentially, while net profit jumped 59% on year and 47% on quarter, it said late Friday.

It also announced the board’s approval to boost its capex budget for the expansion of its Resorts World Sentosa facility to S$6.8 billion, which analysts estimated to be a 50% increase from levels earmarked in 2019. Genting Singapore attributed the higher outlay to a rise in commodity and labor costs in recent years, plus some changes to initial designs, according to analysts briefed on the matter.

Citi analysts George Choi and Ryan Cheung lauded a “solid beat” and raised 2023-2025 earnings forecasts by a range of 1%-13%, while maintaining a buy rating. They trimmed the stock’s target price to S$1.20 from S$1.26 to reflect the expanded capex but said the plans appeared largely priced in to the stock.

“We still like the stock as we believe RWS is one of the major beneficiaries from the return of inbound visitors,” they wrote in a research note, adding that “a likely increase in dividends” also make shares attractive.

Nomura analysts Tushar Mohata and Alpa Aggarwal liked the “strong beat,” highlighting a 140% on-quarter rise in VIP rolling chip volume.

The “results should dispel [recent] concerns” about weakening China macroeconomic conditions, the state of the VIP market and lackluster results in the first two quarters that have hurt Genting Singapore’s stock this year, the analysts wrote in a note. They kept a buy rating with a S$1.26 target price.

Maybank analyst Yin Shao Yang raised his target price by about 4% to S$1.12, saying VIP volume surged to an eight-year high to propel the profit beat. “Equally, if not more importantly, mass market gross gaming revenue also continues to grow after years of stagnation during pre-Covid times,” he added in a note.

Write to Ben Otto at [email protected]