Genting Singapore

[Choon]

At around S$1.25, I think there is an opportunity.

Sharing my analysis.

[Choon]

I think that Genting Singapore has got a really bad deal with the expansion of RWS. 

Heavy investment of S$4.5bn and largely on non-gaming facilities. 

Would require very bullish projections of gaming and non-gaming revenue growth for the investment to pay off. Yet with casinos sprouting across Asia.

Would management have went for an investment of this magnitude if left to its own decision? 

Hope to hear some thoughts.

[wonghw12]

I think that Genting Singapore has got a really bad deal with the expansion of RWS. 

Heavy investment of S$4.5bn and largely on non-gaming facilities. 

Would require very bullish projections of gaming and non-gaming revenue growth for the investment to pay off. Yet with casinos sprouting across Asia.

Would management have went for an investment of this magnitude if left to its own decision? 

Hope to hear some thoughts.

Your suspicion is probably correct. Bobian for Genting Singapore to contribute to Singapore's nation building. Take it (by contributing $4.5b) or leave it (exit SG casino).

The amount ($4.5b) seems to be around half the profits that Genting Singapore is making.

Maybe we'll see a thank you note from Singapore to Malaysia for nation building (expansion of attractions by Genting, free takeover of Tuaspring's water asset that is debt-financed by Maybank)

[AQ.]

I don't follow this in great detail, but cursory thoughts:

1. The authorities have negotiated a decent deal for itself. The only thing on the table is to decide an end to the exclusivity but this bargaining chip is pretty weak i think. Is there really enough political support for a third casino in sg? Personally i think no - so even if the exclusivity clause is to lapse, there will prob not be a third player granted for quite some time.

The deal essentially is for an expansion of gaming machines -  1000 for MBS and 800 for RWS respectively. In return they need to sink in 9bio for MICE etc (which are relatively low yielding) which will bring in decent GDP growth after multipliers into construction+tourism etc, on top of rises in taxes on revenues i.e. the G has essentially reaped very good ROI in exchange for promising further exclusivity (which is prob going to happen anyway) + plots of land.

2. I think Sands have gotten a very good deal thus far. MBS was built @ cost of 5.6bio USD (inc land costs) and reported 49% of Shoppes alone was up for sale for 3-3.5bio USD. So the entire project is throwing up good cashflow and they wait for super-prime land capital appreciation. Adelson should be grinning.


 https://www.marinabaysands.com/content/d...tsheet.pdf

https://www.straitstimes.com/business/co...oppes-mall

3. In comparison think Genting has the weaker deal - less gaming machines than MBS+still no junkets allowed but need to spend a bunch of capex on less prime land.

[dreamybear]

Genting generates strong cashflow of up to $1b per yr, with net cash position at abt S$3.30 billion. It's pipeline includes the S'pore IR expansion(ard S$4.5b) & developing a Jp casino.
 
Given the "expected" high capex in Jp mentioned in the article below, it will be interesting to see Genting's capital funding plans.

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Pricey Japan is best game in town for US casinos
Published : Tue, Jun 04, 2019 - 10:17 AM

[HONG KONG] Pricey Japan is the best game in town for US casinos. The likes of Las Vegas Sands and MGM Resorts had already vowed to spend US$10 billion each on a complex there.... Last week the city of Yokohama announced rivals vying for concession rights there are offering to splurge close to US$12 billion....

Yet Japan is not cheap. Investors must factor in high labour and construction costs, and then there's the question of how enthusiastic the locals will be. A 2017 Las Vegas survey found Japanese tourists were the stingiest, spending less than half Chinese peers. ....

Japan legalised casinos in 2016 and is developing specific regulations for casino resorts at three locations across the country. Las Vegas Sands, Wynn Resorts, MGM Resorts, Melco Resorts and Entertainment, Galaxy Entertainment and Genting Singapore have all expressed interest in developing a complex, according to filings and media reports.

REUTERS

More details : https://www.businesstimes.com.sg/consume...us-casinos

[blackclock]

I think Genting has got a seriously bad deal. Another $5b capex for 10 years of license is equal to losing $500m per year
these new capex won't generate much ROI.

I feel Genting should sacrifice the exclusivity and let in new competitors. It won't be worse off, unless there are more than 2 new competitors. The new ROI effectively halved Genting's net profit for the next 10 years. This makes the current dividend of 3.5 cents per year a little risky. Don't think Genting can afford to pay any more than that.

But it's good for the economy. With very little FDI nowadays, both casino's $10b injection is a gift from heaven. It will create a lot of jobs. The new Oceanarium will also help to compete against Macau's new Water theme park - Chimelong, which I think is even better than Japan's Okinawa aquarium
See here http://oceankingdom-int.chimelong.com/Oceankingdom/EN/

Valuation wise, I think only if they win the new Japan casino license. Else, I will only pay 40 - 50 cents for this company. Because it's Cash flow generation ability is dropping around 10% per year (inflation adjusted).

[blackclock]

Hopefully China don't block their tourist to Genting. Else, it's going to be painful

https://en.radiofarda.com/a/singapore-de...83605.html

Singapore Detained Two Ships Carrying Iranian LPG In Violation Of US Sanctions
July 30, 2019

Two vessels carrying Iranian LPG or liquid gas involved in Iran-China deliveries were detained in Singapore on July 22 and 24, a ship-tracking source has told Radio Farda.

The ships belong to Kunlun Shipping, a private Hong Kong company with a fleet of LPG vessels carrying Iranian-sourced cargoes.

The detention of the vessels is related to U.S. sanctions banning export of Iranian oil and gas and a direct result of a court order. However, Radio Farda has learned that the ships are no longer listed in the “vessels under Sheriff's arrest” section on the website of the Singapore Supreme Court.

Kpler, a data intelligence firm, informs that one of the ships, Sea Dragon seems to have been released, as satellite images show it has left Singapore and is sailing back toward the Persian Gulf, carrying its load. The other vessel Gas Infinity is still in port.

Kpler also reports that the arrests seem to have been targeting vessels owned only by Kunlun Shipping as other ships involved in Iranian trade crossed the Singapore strait around the same dates without incident.

LPG carriers loading from Iran often use deceptive techniques to stay “under the radar” by turning off their transponders and indicating misleading destinations to cover their tracks.

Another Kunlun vessel, Gas Dignity has also been carrying Iranian LPG for the past five years, says Kpler and adds that it last emitted a signal seven days ago but is not in the list of arrested vessels.

[dreamybear]

Casinos didn't bet on how hard it would be to crack the Japanese market
Thu, Dec 19, 2019 - 7:45 AM

[TOKYO] Casino executives who have long salivated over Japan as a potential US$20 billion gaming market are beginning to question whether that jackpot is worth all the trouble......

A number of casino executives, who declined to speak publicly because of the sensitive nature of the casino approval process, told Bloomberg News that the process in Japan has been more difficult compared with other markets that have built gaming industries.....

https://www.businesstimes.com.sg/consume...ese-market

[cyclone]

[b]Genting Singapore posts 4% increase in 4Q earnings to $156 mil, full-year earnings lifted to $689 mil

Uma Devi
12/02/2020, 6:22pm

SINGAPORE (Feb 12): Genting Singapore (GENS) reported earnings of $155.9 million for 4QFY2019 ended December, some 4% higher than earnings of $150.2 million a year ago.

Despite the higher earnings in 4QFY2019, the group’s full-year earnings came in at $688.6 million, representing a 9% decline from FY2018’s earnings of $755.4 million.

Revenue for the quarter fell 9% to $607.2 million from $664.8 million in 4QFY2018. This was spearheaded by a 13% decline in revenue from the gaming segment of the group’s Singapore operations. The group’s non-gaming segment in Singapore booked a marginal decline of 0.5%.

These declines were partially offset by a 27% increase in the group’s ‘others’ segment, which constitutes its investment business and other support services.

Cost of sales for the quarter slid 13% to $358 million from $410.4 million the previous year.

Correspondingly, gross profit fell 2% to $249.2 million from $254.4 million while adjusted EBITDA fell 3% to $1.19 million.

As at end-December, cash and cash equivalents stood at $4.13 billion.

Earnings per share on a basic and diluted basis came in at 1.25 cents and 1.29 cents respectively.

GENS is proposing a final dividend of 2.5 cents per share for FY19, an increase from the dividend of 2.0 cents per share paid out in FY18. The group says that the payment date of the proposed dividend will be announced at a later date.

More details in https://www.theedgesingapore.com/capital...lifted-689

See also https://links.sgx.com/FileOpen/GENS%20SG...eID=596070

[¯|_(ツ)_/¯]

13 May 2020 Genting 1Q20 update
https://links.sgx.com/FileOpen/1Q2020%20...eID=610533



Rev $406m down 36% yoy
Adjusted EBITDA $146m down 55%

did not publish GP and NP. 

Extract for our busy valuebuddies:
our financial performance for 2020 will be severely affected, our Group have strategically built up a strong balance sheet over years that will enable us to continue operating smoothly and pursuing growth both at RWS and globally within our core expertise despite the ongoing crisis. 
We have been engaged in the ongoing Request for Concept (RFC) by Yokohama City and are anticipating the launch of the Request-for-Proposal (RFP) in the second half of 2020.

The pandemic has been absolutely devastating to the tourism industry across the world. Our flagship property, Resorts World Sentosa (RWS) too has been severely affected and will continue to face significant challenges. the social distancing and restrictive border regulations will continue to hinder any medium term
recovery.

Given the fluidity of the unfolding COVID-19 situation, the Group remains pessimistic on its outlook for the remaining year.  RWS took up the role of Managing Agent for the Community Care Facility (CCF) at Singapore EXPO and MAX Atria with a total capacity of 8,000 beds accounting for approximately 40% of the national CCF capacity


Stay home and stay safe, everyone.