Hot stock: Genting Singapore falls 4.9% after posting S$163.3m Q2 loss

SHARES of Genting Singapore tumbled 4.9 per cent on Friday, after the resort operator on Thursday posted its worst quarterly performance since Resort World Sentosa's (RWS) opening in 2010.

Genting Singapore logged a S$163.3 million net loss for the second quarter ended June, reversing from a S$168.4 million net profit a year ago.

As at 2.16pm on Friday, the company's shares fell 3.5 Singapore cents or 4.9 per cent to 67.5 cents. The counter was the second most actively traded by volume on the Singapore bourse by then, with 42.9 million shares changing hands.

In a bourse filing on Thursday, Genting Singapore said making zero revenue amid RWS's temporary closure in Q2 was "devastating", despite the "swift implementation of a series of cost-containment measures, including payroll rationalisation as well as other productivity initiatives".

The company did not declare an interim dividend for H1, a turnaround from the 1.5 Singapore cents per share payout a year ago, but it intends to declare a final dividend for FY2020 - out of its retained profits if necessary.

Analysts from DBS Group Research, Maybank Kim Eng and CGS-CIMB have lowered their target prices.

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DBS and Maybank Kim Eng maintained their "hold" calls on Genting Singapore, while CGS-CIMB reiterated its "add" call - but only for longer-term investors.

DBS lowered its target price for Genting Singapore to S$0.70 from S$0.75 to reflect its negative earnings adjustment, while Maybank Kim Eng cut its target price to S$0.76 from S$0.80. CGS-CIMB cut its target price to S$0.73 from S$0.84.

While Genting's Q2 losses did not come as a surprise, analysts did not expect Genting Singapore to suspend its interim dividend.

DBS was "caught off guard" by the suspension of Genting's interim dividend. It has cut its forecast for the company's fiscal 2020/2021 earnings before interest, taxes, depreciation and amortisation (Ebitda) - for the fourth time this year.

The forecast for fiscal 2020 Ebitda was slashed by 87 per cent to S$46 million, while the forecast for fiscal 2021 Ebitda was reduced by 12 per cent to S$670 million.

"Despite the brutal hit to its earnings, we believe downside from hereon is limited due to Genting Singapore's attractive valuation," said DBS analyst Jason Sum.

Maybank Kim Eng maintained its earnings per share estimates, but cut its dividend per share estimates to zero for FY2020 and to S$0.02 for FY2021, from S$0.04 previously for both fiscal years.

CGS-CIMB analyst Cezanne See said despite uncertain near-term prospects, the company's strong balance sheet will tide it over the tough times.

Moreover, its position as one of only two casinos in Singapore underscores its importance to Singapore tourism, she added.