CGS International May 15, 2025 Genting Singapore: Poised for Growth in 2H25F with New Attractions Genting Singapore’s 1Q25 Performance: A Brief Overview Genting Singapore (GENS) reported an adjusted EBITDA of S\$235.8m for 1Q25, slightly below expectations, representing 22.3% and 22.8% of CGS International’s and Bloomberg consensus’s FY25F estimates, respectively. [[1]] Profitability was impacted by reduced visits to Resorts World Sentosa (RWS) compared to the high base in 1Q24 and ongoing upgrading activities across the resort. [[1]] The opening of new attractions in 2H25F is expected to drive earnings growth, increasing footfall and improving operating leverage. [[1]] CGS International maintains an Add rating with an unchanged target price (TP) of S\$1.05. [[1]] 1Q25 Results: Impact of Festive Season and Upgrades 1Q25 revenue decreased by 20.2% year-over-year to S\$626.2m, primarily due to a decline in gaming revenue (-20.2% yoy), attributed to lower VIP rolling win rates. [[1]] Lower visitorship and tourism spending at RWS during the Chinese New Year festive season in 1Q25, compared to 1Q24, and reduced room inventory due to renovations at Hard Rock Hotel, contributed to a 9.5% yoy decline in non-gaming revenues. This also negatively affected the mass gaming segment, which relies on transient, casual gamers. [[1]]-[[2]] GENS’s adjusted EBITDA of S\$235.8m (-36.2% yoy/+4.6% yoy) resulted in a margin compression of 9.5 percentage points, likely due to operating expenses related to the upcoming Singapore Oceanarium, The Laurus (an all-suite hotel), and the WEAVE lifestyle enclave in 3Q25F. [[2]] New Offerings in 2H25F: A Potential Tourism Boost Despite potential headwinds in Singapore’s tourism industry due to macroeconomic factors, the completion of upgrades at RWS in 2H25F is expected to attract more visitors. [[2]] Increased hotel room inventory and complementary offerings, such as the Singapore Oceanarium and new retail and dining concepts, including KA-MON and Sugarra (opened in 1Q25), are anticipated to drive visits. [[2]] These new attractions are expected to appeal to both tourists and locals. [[2]] Investment Thesis: Reiterate Add Rating CGS International reiterates its Add rating, anticipating incremental half-over-half (hoh) improvement in profitability in 2H25F with the launch of new RWS attractions. [[3]] FY25F-27F estimates remain unchanged, with the TP of S\$1.05 pegged at 8x FY26F EV/EBITDA, 0.5 standard deviations below GENS’s 5-year mean, reflecting a cautious outlook on the tourism industry in Singapore. [[3]] GENS is seen at a valuation inflection point, currently trading at a trough valuation of 5x 12-month forward rolling EV/EBITDA. [[3]] Catalysts and Risks Re-rating catalysts include better-than-expected popularity of new attractions and a regional revitalization of the travel industry boosting tourist arrivals to Singapore. [[3]] Downside risks include delayed opening of new attractions and softer macroeconomic conditions leading to a slow uptick in footfall after the rollout of new attractions in 2H25F. [[3]] Key Statistics Current Price: S\$0.735 [[4]] Target Price: S\$1.05 [[4]] Up/downside: 43.3% [[4]] Market Cap: US\$6,839m (S\$8,881m) [[4]] Average Daily Turnover: US\$18.03m (S\$24.02m) [[4]] Major Shareholders Genting Bhd: 52.7% [[4]] Vanguard Group: 1.4% [[4]] Blackrock: 1.4% [[4]] Financial Summary (S\$m) Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F Revenue 2,418 2,530 2,646 3,031 3,173 Operating EBITDA 1,025 960 1,057 1,249 1,302 Net Profit 634.4 594.2 604.2 687.6 695.3 Normalised EPS (S\$) 0.053 0.049 0.050 0.057 0.058 Normalised EPS Growth 86.5% (6.3%) 1.7% 13.8% 1.1% FD Normalised P/E (x) 13.99 14.94 14.70 12.91 12.77 DPS (S\$) 0.035 0.040 0.040 0.040 0.040 Results Comparison (Figure 1) FYE Dec (S\$m) 1Q25 1Q24 yoy % change 4Q24 qoq % change Prev. FY25F Comments Revenue 626.2 784.4 -20.2% 612.2 2.3% 2,645.6 1Q25 revenue was relatively in line at 23.7%/23.8% of our/Bloomberg consensus’ FY25F estimates. Gaming 437.5 576.0 -24.0% 415.6 5.3% 1,808.2 Gaming revenues declined 24.0% yoy in 1Q25 due to lower VIP win rates, alongside a likelihood of weaker mass gaming revenues given the lack of casual gamers among hotel guests due to ongoing renovation works at Hard Rock Hotel that had led to lower overall hotel room inventory. Non-gaming 188.5 208.3 -9.5% 196.5 -4.1% 835.4 Non-gaming revenues declined 9.5% in 1Q25 due to lower visits and tourist spend within RWS. Others 0.2 0.1 18.0% 0.2 -5.7% 2.0 Adj. EBITDA 235.8 369.5 -36.2% 225.4 4.6% 1,056.9 1Q25 adj. EBITDA was slightly below expectations at 22.3%/22.8% of our/Bloomberg consensus’ FY25F estimates. Adj. EBITDA margin 37.7% 47.1% -9.5% pts 36.8% 0.8% pts 40.0% 1Q25 adj. EBITDA margins compressed 9.5% pts yoy, likely Net profit 145.0 247.4 -41.4% 142.6 1.7% 604.2 1Q25 net profit was in line at 24.9%/24.2% of our/Bloomberg consensus’s FY25F estimates. Core net profit 150.3 249.3 -39.7% 143.8 4.5% 604.2 Peer Comparison (Figure 4) Company Ticker Recom. Price (lcl curr) TP (lcl curr) Market Cap (US\$ m) CY25F P/E CY26F P/E 3-year EPS CAGR (%) CY25F ROE (%) CY26F ROE (%) Net Gearing (%) Div. Yield CY25F (%) Div. Yield CY26F (%) Genting Singapore GENS SP Add 0.735 1.05 6,809 14.7 12.9 4.4% 7.2% 8.1% -40.3% 5.4% 5.4% Genting Malaysia GENM MK Add 1.78 3.65 2,334 10.1 8.1 24.0% 7.4% 9.0% 50.7% 9.3% 10.1% Genting Bhd GENT MK Add 3.29 6.00 2,931 7.0 6.4 N.A. 5.1% 5.4% 21.8% 4.6% 4.6% Paradise 034230 KS Add 12,900 15,000 831 15.5 14.1 10.2% 4.5% 4.8% 20.2% 1.2% 1.2% Grand Korea Leisure 114090 KS Add 12,820 14,000 557 16.2 14.0 25.0% 11.3% 12.6% -34.6% 3.1% 3.6% Kangwon Land 035250 KS Add 16,970 19,000 2,549 11.2 10.5 -8.7% 8.1% 8.5% -31.3% 5.2% 5.6% ESG Analysis Genting Singapore received a B rating from LSEG for its combined ESG score in 2023. [[4]] The Singapore IR operating model is considered one of the highest standards within the global gaming industry due to stringent government regulations promoting responsible gaming. [[4]] ESG Highlights Resorts World Sentosa 2.0 (RWS 2.0) Waterfront Development aims to reduce its construction footprint and enhance energy efficiency. [[4]] Initiatives under the RWS 2.0 project are expected to promote green infrastructure, positively impacting the hospitality industry. [[4]] Controversies GENS’s controversies score of B- from LSEG was due to two fines issued in 2023 for failures in customer due diligence checks. [[4]] These incidents are not expected to pose systemic compliance risks, as GENS collaborates with regulators to maintain high regulatory compliance standards. [[4]]-[[5]] GENS has introduced a facial recognition program to screen for patrons on terrorist lists or barred patrons to support compliance efforts against money laundering and terrorism financing. [[5]] ESG Trends GENS maintained a combined ESG score of B in 2023 due to the deterioration in the controversies score; otherwise, its ESG scoring would have improved to B+. [[5]] Potential scope for improvement exists, particularly in the Governance (G) pillar, through increased disclosures under its corporate social responsibility (CSR) strategy. [[5]] The company is reviewing its long-term sustainability targets for 2021 to 2030, supporting the United Nations’ Sustainable Development Goals, the Paris Climate Agreement, and the Singapore Sustainable Blueprint plans. [[5]]-[[6]] Profit & Loss (S\$m) Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F Total Net Revenues 2,419 2,534 2,647 3,033 3,174 Gross Profit 907 855 942 1,098 1,123 Operating EBITDA 1,025 960 1,057 1,249 1,302 Depreciation And Amortisation -367 -356 -406 -484 -528 Operating EBIT 658 604 651 765 774 Financial Income/(Expense) 138 137 118 111 112 Pretax Income/(Loss) from Assoc. 4 5 0 0 0 Non-Operating Income/(Expense) 0 0 0 0 0 Profit Before Tax (pre-EI) 777 731 770 876 886 Exceptional Items -23 -15 0 0 0 Pre-tax Profit 777 731 770 876 886 Taxation -165 -152 -165 -188 -190 Profit After Tax 612 579 604 688 695 Minority Interests 0 0 0 0 0 Other Adjustments – post-tax 23 15 0 0 0 Net Profit 634 594 604 688 695 Recurring Net Profit 657 610 604 688 695 Fully Diluted Recurring Net Profit 657 610 604 688 695 Normalised Net Profit 612 579 604 688 695 Fully Diluted Normalised Profit 634 594 604 688 695 Cash Flow (S\$m) Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F EBITDA 1,025 960 1,057 1,249 1,302 Cash Flow from Invt. & Assoc. -4 -5 0 0 0 Change In Working Capital -210 -239 -160 -147 -204 Other Operating Cashflow 135 185 201 211 222 Net Interest (Paid)/Received 143 141 118 111 112 Tax Paid -130 -183 -165 -188 -190 Cashflow From Operations 959 860 1,051 1,236 1,241 Capex -328 -423 -759 -1,082 -1,090 Acq. Of Subsidiaries/investments -59 -34 0 0 0 Other Investing Cashflow -3 56 0 0 0 Cash Flow From Investing -389 -401 -759 -1,082 -1,090 Debt Raised/(repaid) -3 -2 0 0 0 Dividends Paid -423 -483 -483 -483 -604 Other Financing Cashflow -59 0 0 0 0 Cash Flow From Financing -485 -485 -483 -483 -604 Total Cash Generated 84 -27 -191 -329 -452 Free Cashflow To Equity 566 456 292 154 151 Free Cashflow To Firm 570 460 292 154 151 Balance Sheet (S\$m) Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F Total Cash And Equivalents 3,669 3,588 3,397 3,068 2,616 Total Debtors 240 274 169 177 189 Inventories 48 50 53 60 64 Total Other Current Assets 0 0 0 0 0 Total Current Assets 3,957 3,912 3,619 3,305 2,869 Fixed Assets 4,960 5,075 5,455 6,079 6,667 Total Investments 72 77 77 77 77 Intangible Assets 132 110 84 57 31 Total Other Non-Current Assets 26 56 56 56 56 Total Non-current Assets 5,190 5,318 5,671 6,269 6,831 Short-term Debt 0 0 0 0 0 Total Creditors 566 572 510 590 623 Other Current Liabilities 193 179 179 179 179 Total Current Liabilities 759 751 689 769 802 Total Long-term Debt 0 0 0 0 0 Total Other Non-Current Liabilities 13 17 17 17 17 Total Non-current Liabilities 13 17 17 17 17 Total Provisions 183 165 165 165 165 Total Liabilities 955 933 871 951 984 Shareholders’ Equity 8,192 8,298 8,419 8,624 8,715 Minority Interests 0 0 0 0 0 Total Equity 8,192 8,298 8,419 8,624 8,715 Key Ratios Key Ratios Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F Revenue Growth 40.1% 4.6% 4.6% 14.6% 4.7% Operating EBITDA Growth 35.4% (5.7%) 11.9% 18.1% 4.3% Operating EBITDA Margin 41.5% 37.3% 40.0% 41.2% 41.0% Net Cash Per Share (S\$) 0.30 0.30 0.28 0.25 0.22 BVPS (S\$) 0.68 0.69 0.70 0.71 0.72 Gross Interest Cover 685.5 596.0 N/A N/A N/A Effective Tax Rate 21.3% 20.8% 21.5% 21.5% 21.5% Net Dividend Payout Ratio 66.6% 81.3% 79.9% 70.2% 86.8% Accounts Receivables Days 25.49 37.22 30.54 20.80 21.06 Inventory Days 10.95 10.67 11.04 10.64 10.99 Accounts Payables Days 122.1 123.8 115.4 103.4 107.6 ROIC (%) 13.6% 12.7% 13.5% 14.9% 13.7% ROCE (%) 9.3% 8.6% 9.0% 10.1% 10.0% Return On Average Assets 5.54% 4.97% 5.25% 6.11% 6.06% Key Drivers Key Drivers Dec-23A Dec-24A Dec-25F Dec-26F Dec-27F VIP Chip Volume (% chg) 30.0% -10.0% 5.0% 5.0% 5.0% VIP Chip Win (%) 3.0% 3.0% 3.0% 3.0% 3.0% Mass market drop (% chg) 29.7% 9.8% 8.1% 10.6% 5.8%
