Maybank KE upgrades Genting Singapore to 'buy', cites recovery with Phase 3 reopening

MAYBANK Kim Eng (MKE) has upgraded its recommendation on Genting Singapore to "buy" from "hold", and raised its target price on the integrated resort operator to S$0.95, from S$0.78 previously.

The counter was trading at 85.5 Singapore cents as at 4.39pm on Tuesday, up 0.5 cent or 0.6 per cent.

In a research note on Tuesday, MKE analyst Yin Shao Yang noted that the Phase 3 of Singapore's reopening will be positive for Genting Singapore.

Among the easing measures, attractions - including integrated resorts - will be allowed to increase operating capacity to 65 per cent from 50 per cent.

Mr Yin said that Genting Singapore's Q3 earnings outperformance was largely based on 25 per cent operating capacity. Attractions were allowed to increase operating capacity to 50 per cent from 25 per cent with effect from Sept 18, while the Resorts World Sentosa (RWS) casino was open to all guests from Oct 9 onwards. Thus, Q4 earnings should be better on a quarter-on-quarter basis, the analyst said.

Separately, other developments such as the arrival of the Pfizer-BioNTech vaccine by the year-end and Singapore gradually reopening its borders also bode well for Genting Singapore, MKE noted.

Singapore aims to vaccinate its entire population by end-2021, Prime Minister Lee Hsien Loong announced in a televised address to the nation on Monday. This will instill confidence in Singaporeans to visit RWS again, MKE said.

The brokerage believes that prior to the Covid-19 pandemic, locals accounted for about 20 per cent of Genting Singapore's VIP gross gaming revenue (GGR), and half of its mass market GGR.

Additionally, PM Lee also stated that Singapore will gradually reopen its borders. "This is important as we gather that Chinese, Malaysians and Indonesians accounted for about 80 per cent of VIP GGR and 50 per cent of mass market GGR pre-Covid-19," MKE noted.

The brokerage has rolled forward its valuation base year from end FY20E to end FY21E to derive a revised target price of S$0.95.