KUALA LUMPUR: Genting Bhd's 52.6 per cent-owned Genting Singapore, which develops and operates casinos and integrated resorts in Resorts World Singapore (RWS), is expected to perform better moving forward.
RWS still has significant growth potential for increased visitations, according to Hong Leong Investment Bank Bhd (HLIB).
It noted that Singapore's tourist arrival numbers are still below pre-Covid-19 levels, standing at 3.86 million as of the third quarter of 2023 (3Q2023) compared to five million in 3Q2019.
HLIB also pointed out that flight capacity from China to Singapore has only reached about 77 per cent of 2019's capacity, indicating room for improvement.
"Volume wise, Chinese tourist arrivals recovered to 581,500 in 3Q 2023, but still a far cry from the 1.04 million Chinese tourists recorded in 3Q 2019.
"We anticipate RWS to capitalise on spill-over benefits from several prominent music concerts scheduled to take place in Singapore," it said in a note today.
Genting Singapore has received approval from the Urban Redevelopment Authority to develop 700 new hotel rooms (adding to the current 1,600 rooms) and a retail space with a gross floor area of 21,243 square metres.
This would serve as a foundation for the company's long-term growth, the report stated.
Genting Singapore reported a 3Q 2023 net profit of S$216.3 million, up 46.7 per cent quarter-on-quarter (QoQ) and 59.3 per cent year-on-year (YoY), bringing the nine-month 2023 (9M 2023) net profit to S$493 million.
HLIB said the performance made up 74 per cent of the firm's and 83 per cent of consensus expectations.
The sustained growth momentum can be attributed to the gradual recovery in tourist arrivals and increased spending during the summer holidays, it noted.
HLIB Research made no changes to its earnings forecasts or target price of $1.24.
The firm maintained a "Buy" on Genting Singapore as it is encouraged by the tourist recovery momentum in Singapore and given the fact that RWS is well positioned to capitalize on this trend.
Maybank Investment Bank (Maybank IB) also maintained a buy call on Genting Malaysia with a higher target price of S$1.16.
The VIP volume surged to an eight-year high and drove 3Q 2023 results to exceed its expectations, Maybank IB said.
"According to our records, the 3Q 2023 VIP volume was the highest since 2Q 2015. Equally, if not more importantly, mass market GGR also continues to grow after years of stagnation during pre-Covid times,' it said.
Maybank IB raised its FY 2023E/2024E/2025E core earnings per share by 12 per cent, 6.0 per cent, and 6.0 per cent on account of higher VIP volume.
According to the firm, Genting Singapore expects operations to continue to improve as seat capacity from major source.