Genting Bhd’s (GENT) 52.7%-owned subsidiary, Genting Singapore (GENS), saw its 1HFY23 net profit more than tripled to SGD276.7m, as it continued to chalk higher foreign visitor arrivals from the pandemic year of FY22. On a QoQ basis, net profit jumped 14.1% to SGD147.5m, mainly on higher gaming revenue. For 1HFY23, the results came in within expectations. No change to our earnings forecasts. An interim dividend of 1.5 cents per share was declared (1HFY22: 1 cents per share). Maintain Outperform on GENT with an unchanged TP of RM5.50.

• 2QFY23 revenue (+19.7% QoQ) lifted by the continuous recovery of international travels, which led to a 19.7% increase in gaming revenue. This was on the back of a 3% QoQ growth in gross gaming revenue. Meanwhile, non-gaming business also benefited from higher visitorship, posting a 26.3% increase in revenue.

• 2QFY23 net profit increased by 14.1% QoQ. Adjusted EBITDA jumped 36%, driven by the rebound in non-gaming business, higher than-theoretical VIP win rate and a recovery in regional gaming business. Given the strong recovery in business, net impairment on trade receivables has also increased to SGD32.3m in 1HFY23 from a reversal of impairment of SGD2.7m.

• Performance still limited by flight capacity constraint and elevated airfares. Flight capacity has been improving since early 2022 and this has led to a recovery of tourist arrivals into Singapore. Although the recovery has been slow following the reopening of international borders, sharp improvement has been observed in recent months with Singapore’s Jan-May 2023 total air passenger arrivals recovering to 82% of 2019 pre-Covid level. This may look promising but total arrivals from China still fall short of pre-pandemic at only 30% of 2019. Arrivals from China used to account for about 11% of total arrivals in 2019 but now only stood at 5.6% (based on the latest May 2023 statistics). We believe this is attributable to weaker consumer confidence and elevated airfares which prevented a full recovery of international travels from China. Nevertheless, we note that this is still a significant improvement from under 1% recorded between April 2022 and November 2022.

Source: PublicInvest Research - 11 Aug 2023