Genting Singapore shares slide but analysts upbeat on future profits

SINGAPORE – Genting Singapore saw its shares slide in the past week after the integrated resort operator reported a dip in third-quarter results on Nov 7.

Shares of Genting Singapore have tumbled by around 5 per cent since then, closing at 76.5 cents on Nov 14. Despite this, analysts are optimistic about the company’s future earnings potential, thanks to expansion plans that involve boosting its non-gaming options amid softer casino revenues.

These include the construction of a waterfront development, which involves two new luxury hotels with a total of 700 rooms, at Resorts World Sentosa (RWS). It will break ground on Nov 15.

Genting Singapore, which operates RWS, reported a 19 per cent year-on-year drop in third-quarter revenue to $561.9 million on Nov 7.

The drop was mainly attributed to lower VIP rolling volume, which refers to the total amount of wagers made by high-stakes gamblers.

Analysts said Genting Singapore’s financial performance came in below expectations, but still maintained their “buy” calls on the stock.

UOB Kay Hian analyst Jack Goh noted that the non-gaming segment charted “resilient improvement”.

Non-gaming revenue surged more than 20 per cent quarter on quarter, despite having a lower number of daily available rooms due to the closure of Hard Rock Hotel in early March for renovations and rebranding.

Hard Rock Hotel will have a soft opening in the first quarter of 2025 as a luxury all-suite hotel.

Mr Goh also saw promise in RWS’ potential for growth in the coming years, given its $6.8 billion expansion plan.

In a third-quarter business update on Nov 7, Genting Singapore said it will commence work on the expansion of RWS with new non-gaming attractions. This will see the existing area expanded by about 50 per cent, adding more than 164,000 sq m of new gross floor area.

It will also begin construction of the new waterfront development in November.

Other offerings in the pipeline include

a Harry Potter interactive art experience

that will open in November.

In the first quarter of 2025, it will also open a central lifestyle connector, which will cover more than 20,000 sq m over three levels and provide a variety of upscale restaurants, specialty shops and concept stores.

It will also be opening its

Minion Land segment at Universal Studios Singapore.

The S.E.A. Aquarium is also

expected to be transformed and expanded into the Singapore Oceanarium,

which will include a deep ocean exhibit, and a research and learning centre to drive solutions and marine science outreach. This will have a soft opening in the first half of 2025.

Mr Goh said he is optimistic that Genting Singapore will deliver sequential earnings growth for the rest of 2024.

This positive outlook is based on an accelerated recovery in foreign visitors and flight frequencies, he said.

He noted that foreign tourist visitation numbers are improving but still hovering below pre-pandemic levels, and that a steady improvement in tourists flying in could also bode well for Genting Singapore.

He also noted that Genting Singapore has a slew of mega entertainment events in the pipeline, and a sustained trend of higher spending per capita in RWS.

In addition, RWS’ intensified marketing efforts through social media platforms will attract more footfall and spending, he said. 

DBS Bank research analysts Jason Sum and Chee Zheng Feng noted that Genting Singapore operates RWS, one of the largest fully integrated resorts in South-east Asia, holding an enviable position within Singapore, a vibrant tourism hub with a strong domestic market.

“Not only is competition in Singapore relatively less intense compared to other markets due to the duopoly structure in the country, RWS also has better business (higher percentage of non-gaming revenue) and geographical diversification (in terms of source markets),” they said.

They noted that the renovation that is expected to be completed in the first quarter of 2025, together with upcoming attractions, could drive improvement in non-gaming revenue and attract more VIP customers at RWS.

Maybank analyst Yin Shao Yang noted that the VIP and mass markets performance in the gaming segment came in weaker than expected, but maintained his call to buy the stock.

“At its current share price, the market is discounting its ‘RWS 2.0’ investments that will increase its appeal and earnings in the long term, in our view,” he said. RWS 2.0 refers to the current phase of development and renovations at RWS.