Genting Singapore shares drop 8% after Q1 earnings fall

[SINGAPORE] Shares of Genting Singapore fell as much as 8.7 per cent on Wednesday (May 13), after it reported weak first-quarter net profit on Tuesday evening.

The counter fell as low as S$0.63 in the first few minutes of trading on Wednesday, erasing as much as S$725 million in market capitalisation with the S$0.06 decline per share. It later pared some losses to be 8 per cent down at S$0.635 as at the midday trading break.

Genting Singapore was the largest decliner on the Straits Times Index on Wednesday morning.

The company posted Q1 net profit of S$65.2 million, down from S$145 million in the year-ago period. Revenue dropped 3 per cent on the year to S$607.6 million, driven by lower gaming revenue which fell 8 per cent to S$403.4 million.

The owner and operator of Resorts World Sentosa (RWS) – which includes Universal Studios Singapore – said the war in Iran and related geopolitical developments have increased energy, freight and logistics costs.

Elevated airfares have led to a drop in travel demand and consumer sentiment.

DBS Group Research on Wednesday downgraded the stock to a “hold” rating with a S$0.67 target price, forecasting the remainder of the year to remain “challenging” due to softer tourist inflows.

Genting Singapore’s poor results contrasted with Marina Bay Sands (MBS), which posted another new high for its Q1. Its earnings, reported on Apr 22, rose 30.2 per cent to US$788 million, as net revenue picked up 27.9 per cent year on year to US$1.5 billion.

RWS’ positioning on Sentosa island is “relatively less accessible” and presents a locational disadvantage compared with MBS, said DBS analyst Chee Zheng Feng.

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Genting Singapore Q1 net profit drops 55% to S$65.2 million on lower gaming revenue

“Significant activation efforts are required to drive higher visitation to RWS,” he added, noting that the activations and renovations at RWS have not been able to offset its locational disadvantage.

“A comprehensive rethink of its operational strategy and asset enhancement initiatives may be required to restore the company to its historical profitability levels.”