Genting Singapore will likely recover in H2: analysts

The firm still has an attractive valuation relative to regional gaming peers.

Genting Singapore is tipped to recover in H2 2020, following the weaker 2019 profits it posted, according to a note by DBS Group Research.

The report cited a number of reasons, including Genting Singapore’s attractive valuation relative to regional gaming peers, strong medium-long term growth prospects underpinned by the expansion of Resorts World Sentosa (RWS) and its potential entry into Japan.

DBS also added that its sustainable c.4.6% forward dividend yield supported by its robust operating cash flows and balance sheet.

“We opine that the 6.9% drop in its share price since the onset of COVID-19 is a buying opportunity for value investors, with a potential re-rating catalyst around the corner,” said Jason Sum, analyst at DBS.

Further, Sum added that they remain bullish on Genting Singapore’s stock as the market has yet to appreciate its Japan optionality as it is one of the frontrunners for the Osaka integrated resort project.

Winners for the Osaka and Yokohama projects will be announced in early Q4 2020.

However, Q1 2020 may turn out to be a struggle for the firm, stated a separate analyst note from Maybank Kim-Eng.

“We expect 1Q20 to be poor due to the Covid-19 outbreak which caused: (i) Singapore to bar Chinese visitors from 1 Feb 2020; and (ii) fewer locals to visit RWS. As new Covid-19 deaths and cases are subsiding, we believe the negative impact to RWS will not last beyond 2Q20. We also introduce FY22 EPS (+2% YoY),” said Yin Shao Yang, an analyst at Maybank Kim-Eng.

But Yin noted that this could be countered when the government will provide aid to aid and relief for RWS.