Genting Singapore stocks are expected to outperform due to a stabilizing Singapore gaming market, strong cash flow generation and a resumption of sizable share buy back, says a report from Bernstein.
Given Genting’s large and diversified product offerings, including VIP, mass, hotels, F&B, retail, MICE, Universal Studios theme park and the Marine Life Park, the casino operator is expected to generate strong cash flow from mass and non-gaming assets. “We forecast EBITDA to grow at 8 percent 2015E-2018E CAGR and Adjusted EPS to grow at 1 percent CAGR.
We forecast only 30% of its gross revenues will come VIP, while 27% of net revenues are derived from non-gaming,” Bernstein adds. The company is also making progress on their A/R issues and is focusing on developing the mass business further.
Although VIP business remains weak, mass continues to be stable over the last three quarters, and thus a slow recovery is in store for both mass and VIP in 2016.
Bernstein analysts say the stock is below its intrinsic value, and thus providers a buying opportunity.
Bernstein has updating their estimates for Y15Q4 to account for the latest market developments such as Marina Bay Sands results, and their current view of the Singapore market. They forecast adjusted EBITDA to S$208 million on revenue of S$633 million.
Genting Singapore will report its Y15Q4 results on Feb 18, 2016.
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