Analysts bearish on Genting Singapore despite share buyback

Wednesday 26th of November 2014

Analysts are bearish about the prospects for Genting Singapore despite a stock buyback program, which has helped underpin the share price, Bloomberg reports.

The difference between Genting’s share price and analysts’ predictions for where it will be in 12 months narrowed yesterday to the least since December 2013, the news agency said, citing its own data. Twelve-month average price targets dropped to S$1.24 ($0.95) from S$1.55 a year ago, compared with a closing price of S$1.155 yesterday.

The company, which is owned by Malaysia’s Genting Bhd, has seen its rating cut by at least nine of the analysts who cover the stock this month, the report said.

It cited CLSA Asia Pacific Markets as saying the 12 percent rally triggered by the share buyback is likely to be short lived.

Genting gained authority to buy back as much as 1.22 billion shares, or 10 percent of its outstanding stock, in April. The company only started the program on Nov. 13, a day after the shares sank to a four-year low.

Genting Singapore reported a 43 percent drop in Q3 net profit and warned the Asian gaming and tourism industry is facing “significant challenges.”

The group posted a net profit of $127.1 million ($98.5 million). Revenue declined 17 percent to $644.8 million, while adjusted earnings before interest, tax, depreciation and amortization was S$253.9 million.

The company said its adjusted EBITDA had been affected by an underperforming VIP sector due to a low win percentage.