Genting Bhd’s (GENT) 3QFY23 net profit grew more than threefold to RM520.5m from RM160.6m in 2QFY23, mainly driven by stronger contribution from Singapore and Malaysia. For 9MFY23, core net profit of RM1,211.3m surpassed our and consensus estimates at 127% and 117% of full-year estimates respectively. This was mainly due to stronger-than-expected recovery in Genting Singapore’s (GENS) profit. We raise our FY23-25F earnings profit by an average of 37%, factoring in higher contribution from Genting Singapore on the back of a sustained recovery of the travel and tourism industry. Consequently, our SOTP-based TP is revised to RM5.80. Maintain Outperform.

• 3QFY23 revenue rose 10.7% QoQ. Leisure and hospitality segment posted a 13.7% QoQ growth, mainly on higher contribution from Singapore (+17% QoQ), UK & Egypt (+27% QoQ) and Malaysia (+10% QoQ) as a result of higher business volume. Oil and gas also delivered higher revenue, +19.2% QoQ, on higher crude oil prices. However, this was partly offset by lower revenue contribution from the plantation segment (-4.5% QoQ) due to lower sales volume at downstream manufacturing.

• 3QFY23 headline net profit surged 224% QoQ to RM520.5m, while core profit rose 88% QoQ. Singapore posted a 32% QoQ growth to RM1,193.3m, contributing to 43% of group’s adjusted EBITDA. Malaysia accounted for another 26%, delivering a 7% QoQ increase. Meanwhile, plantation segment posted an 11.7% QoQ increase, mainly due to higher FFB production. This segment contributed 7% of the group’s adjusted EBITDA.

• Outlook. The reopening of international borders has benefitted Resorts World Sentosa with the return of foreign tourists. Year to-date, Singapore’s total air passenger arrivals increased by 112% YoY. Likewise, Resorts World Genting should also see a gradual recovery in visitorship in 2H23, particularly when more Chinese nationals start travelling abroad again. Nevertheless, the number of Chinese tourists is not expected to reach the pre-pandemic levels this year as they may visit other destinations closer to China such as Vietnam and Macau. In the first five months of 2023, Malaysia received only 403,121 Chinese tourists compared to 1.34m over the same period in 2019 (total Chinese tourists were 3.1m in 2019).

Source: PublicInvest Research - 24 Nov 2023