Long recovery for Genting Singapore despite reopening of RWS
The reopening of Resorts World Sentosa (RWS) on July 1, which includes the casino, Universal Studios Singapore theme park and SEA Aquarium, is a positive for Genting Singapore. However, the road to recovery for the entertainment and gaming company is likely to be long and windy, according to RHB Securities analyst Juliana Cai in a July 1 note.
This is because Singapore is not reopening its borders as quickly as it could. Thus far, only officials and business travellers from certain provinces in China can make essential travel to the city- state under a “fast lane” agreement. Singapore is still working with Malaysia to set up crossborder travel.
Mass leisure travel is likely to take longer to resume given that Singapore has just begun Phase Two of the reopening of its economy, says Cai. This means Genting’s traditional visitors, who are mainly tourists from China, Malaysia, Indonesia and other countries, will be limited in number.
In addition, the resumption of tourism depends not just on the number of Covid-19 cases in Singapore, but also how well the pandemic is contained in other countries. “Tourism could take a longer time to recover to [pre-Covid-19] days. A slowdown in global economy could also hamper consumer spending,” she adds. As such, Cai expects Genting to record about 90% of its pre-Covid-19 revenue levels in FY2021.
Cai has also cut her FY2021 and FY2022 forecasts for earnings before interest, tax, depreciation and amortisation, as well as profit after tax and minority interests, for the company by about 11% and 14%, respectively.
Still, she has upgraded Genting to a “neutral” call from “take profit” and raised its target price to 73 cents from 64 cents previously. “At current prices, we believe the market has already priced in some of the recovery in FY2021,” says Cai. —