STOCK SLUMPS ON EXPANSION BET
Casino operator also affected by govt’s plan to raise tax on gross gaming revenue
GENTING Singapore Ltd’s shares plunged to a three-month low yesterday after the casino operator unveiled a S$4.5 billion (RM13.6 billion) expansion plan and the government said it would hike casino entry prices and taxes.
Genting and Las Vegas Sands Corp had committed to spend about S$9 billion on expanding their Singapore resorts, said the government on Wednesday, adding that it would increase the casino entry levies for citizens and permanent residents from yesterday.
The government, which agreed to extend the exclusivity period for the two casinos to end-2030, will raise tax rates on gross gaming revenue from February 2022 through a tiered structure.
“Higher investment cost, levies and gaming taxes from CY22F (calendar year 2022 forecast) onwards are near-term downers,” said CGS-CIMB analyst Cezzane
See in a note.
While Genting’s investment plan had long-term benefits, it would “likely reset its (the firm’s) earnings growth and cash pile”, said See.
The expansions include the construction of a fourth tower at the Marina Bay Sands hotel owned by Las Vegas Sands, while Genting will add a Minion Park and Super Nintendo World among its new attractions at its resort on the island of Sentosa.
Singapore received a record 18.5 million visitors last year, but growth in their spending slowed as they cut back on shopping.
Nomura analysts said Genting’s capital expenditure was higher than their expectations and meant minimal free cash flow for the next four-five years, which could cap near-term dividends.
The share price of Genting Singapore, whose biggest shareholder is Malaysia’s Genting Bhd, fell as much as 8.4 per cent to S$0.98 yesterday, its lowest since early January.