Brokers’ take: Maybank upgrades Genting to ‘buy’ on return of Chinese tourists

MAYBANK Research upgraded Genting Singapore to “buy” from “hold” as it believes the return of Chinese tourists to Singapore will drive the group’s mass market gross gaming revenue (GGR) to above pre-Covid levels.

On Monday (Mar 20), the integrated resort operator’s target price was raised to S$1.18 from S$0.96 to reflect an increase in earnings estimates by 18 to 20 per cent from FY2023 to FY2024. Ebitda (earnings before interests, taxes, depreciation and amortisation) for FY2023 is expected to recover to S$1.2 billion and reach S$1.3 billion in FY2024. 

Maybank’s revised estimates come after China on Jan 8 significantly eased Covid-19 travel curbs, enabling Chinese tourists to visit Singapore freely. Its bullish sentiment on the stock is backed by observations that mass market revenue is increasingly likely to exceed pre-Covid-19 levels “comfortably”. 

Analyst Yin Shao Yang noted that Singapore’s mass market GGR – comprising data from both Las Vegas Sands’ Marina Bay Sands and Resorts World Sentosa, which is owned and operated by Genting Singapore – returned to pre-Covid levels in H2 of 2022, even before Chinese visitors began returning to Singapore from Jan 8.

The mass market segment refers to tables and slot machines within casinos. Its recovery thus far has been driven by Singapore’s booming property prices, Yin said, which created wealth for many Singaporeans and increased their propensity to gamble. 

Yin added that this positive effect of a surge in property prices on gross gaming revenue is also observed worldwide, such as through the rapid recovery of Las Vegas casinos to over 20 per cent above pre-Covid-19 levels.

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“Thus, we gather that Singapore mass market gross gaming revenues could rise even further above pre-Covid levels thanks to the return of Chinese tourists,” said the analyst.  

“At this rate, Chinese tourist arrivals to Singapore could recover to pre-Covid levels by year-end.” 

As at 11.55am on Monday, shares of Genting Singapore were down 0.9 per cent or S$0.01 at S$1.05.