Genting’s profit plummeted 43% in Q3 as Chinese VIPs exit

Net profit dropped to $127.1m.

Genting Singapore failed to luck out last quarter, after the gaming giant yesterday reported a 43% year-on-year plunge in its net profit for Q3. Genting’s net profit came in at $127.1m, down significantly from $222.7m in the same period last year.

According to Genting, the plunge could be blamed on lower turnover from its VIP segment and the continued weakness in the local gaming sector.

“For the third quarter 2014, the premium player business underperformed due to low win percentage. The Asian gaming and tourism industry is experiencing significant challenges in the face of economic slowdown in our major visitor markets and other environmental factors,” noted Genting in its financial statement.

OCBC notes that while Genting’s Q3 results are uninspiring, a turnaround is likely in the future thanks to a potential boost from its Jurong hotel.

“We understand that plans to refresh its attractions are also under way.Nevertheless, we opt to pare our FY14 estimates by 6.1-7.3% (FY15 by 2.9-3.3%); this also lowers our DCF-based fair value from S$1.03 to S$1.01. Although we may see a negative knee-jerk reaction in the near-term, we believe value is emerging, hence we maintain our HOLD rating. Potential entry level closer to S$0.90,” noted OCBC.