Period     2Q13 for Genting Singapore Plc. (“GENS”)

Actual vs.  Expectations    GENS’ 2Q13 results are within expectations. The adjusted EBITDA grew 11% to SGD310.8m which brings the 1H13 adjusted EBITDA to SGD560.5m, accounting for 46% of our full-year FY13 estimate and 45% of the market consensus. 

The 1H13 PAT of SGD315.0m accounted for 56% of the street’s full-year forecast.

Dividends    No dividend was declared during the quarter.  

Key Results Highlights    Although normalising from its record high of SGD16.8b for its rolling chip volume which enjoyed the CNY effect in 1Q13, it remained healthy at SGD13.8b in 2Q13 (-18% QoQ). However, an improved luck factor in the VIP segment (2.5% vs. 2.12%) and a 7% hike in nongaming business helped GENS’ revenue and PAT, which grew by 6% and 17%, QoQ, to SGD707.9m and SGD169.6m, respectively.

YoY, the 2Q13 rolling chip volume surged 29% but the luck factor remained unfavourable in the VIP segment (2.5% vs. 3.1%). This resulted in a flattish topline (+1%) while PAT rose 6% over the year from SGD164.4m last year. YTD, the 1H13 revenue contracted 7% to SGD1.38b while PAT declined 16% to SGD315.0m as 1Q13 was hit hard by unfavourable luck factor. 

In 2Q13, RWS’ market share for the rolling chip volume improved slightly to 49% from 48% in 1Q13 while the non-rolling chip market share breakdown remained fairly unchanged at 47:53 between RWS and MBS.  

The daily average visitor number to the Universal Studios Singapore improved to 10,000 in 2Q13 from 8,400 in 1Q13 while the Marine Life Park saw 9,000 visitors in 2Q13, up from 7,400 in 1Q13. The hotel occupancy rate was maintained at 92% in 2Q13. The average hotel room rate in 2Q13 improved to SGD409 from SGD404 in 1Q13 but fell from SGD432 in 2Q12.

Outlook    The management guided an improved optimism this quarter in view of the potential new Japanese market, despite an expected weaker economy growth in Singapore.

Change to Forecasts   No changes to our GENTING’s FY13-FY15 EBITDA estimates for GENS. 

Rating  NOT RATED for GENS, OUTPERFORM for GENTING.

Valuation     We are keeping our price target on GENTING unchanged at RM12.28/share, based on a 20% discount to its SOP, ahead of the release of its 2Q13 results by the end of this month.

Risks    The risks to GENS include a weaker than expected business volume and a poorer luck factor.

Source: Kenanga