Genting Singapore Shares Drop in Early Trading
Genting Singapore faced a blow in early trading as the casino operator failed to meet certain analysts’ earnings expectations, primarily due to impairments and other charges recorded in the final months of 2023. The shares plummeted by 10% to 93 Singapore cents (69 U.S. cents) on Friday, marking their most significant one-day percentage loss since 2009. This decline, following the release of annual results showcasing an uptick in tourism activity but also revealing declines in fourth-quarter core net profit compared to the previous year, pushed year-to-date performance into negative territory.
Analysts’ Perspectives
Maybank analyst Yin Shao Yang labeled the results as a miss attributed to higher-than-anticipated depreciation and a “kitchen sinking” strategy undertaken in the fourth quarter. Consequently, profit estimates were revised downwards to account for increased impairment of trade receivables and depreciation; the target price was also adjusted from S$1.21 to S$1.16. Despite this, the buy rating was maintained as the analyst emphasized that the depreciation was noncash and that most of the negative impacts on the bottom line were one-off occurrences. Furthermore, optimism stemmed from the growing number of Chinese travelers and the expected reduction in impairments in the future.
Similarly, Citibank analysts George Choi and Ryan Cheung acknowledged an earnings miss while opting to retain a buy rating. The target price was slightly trimmed from S$1.20 to S$1.16 due to an increase in bad-debt provisions resulting from trade receivables impairment. On a positive note, they noted that the stock was trading below its historical average and anticipated favorable outcomes from a robust events calendar lined up in Singapore.
Hong Leong Investment Bank’s Sophie Chua Siu Li echoed a sentiment of confidence, maintaining a buy rating and marginally adjusting the target price upwards. She pointed towards Singapore’s steadily recovering tourism sector and lower-than-expected expenses as reasons for her optimism. Highlighting a noteworthy improvement in performance during the latter part of the year, she also emphasized the potential for growth in Chinese tourist numbers, particularly given that fourth-quarter figures remained significantly lower—54% below—2019 levels.
In conclusion, despite the setback in earnings and subsequent share decline, analysts are unanimous in their belief that Genting Singapore holds promise for future growth and remains resilient in the face of challenges.