Period  4Q13/FY13 for Genting Singapore Plc. (GENS)

Actual vs. Expectations GENS’ 4Q13 results were within expectations. The adjusted EBITDA declined 28% QoQ to SGD250.3m, bringing the FY13 adjusted EBITDA to SGD1.16b which was 5% below our estimates and 9% below market consensus. However, FY13 PAT of SGD707.7m was 4% above market consensus.

Dividends  SGD0.01 DPS was declared for FY13 which is the same as FY12.

Key Results Highlights 4Q13 PAT contracted 24% QoQ to SGD170.0m from SGD222.7m in 3Q13 on the back of a 11% decline in revenue, due to decline in casino business volume where the rolling chip volume dipped 4% to SGD15.5b from SGD16.2b with luck factor remaining flattish at 2.5% in 4Q13. However, non-gaming revenue rose 8% QoQ, attributable to higher visitor and improved rates.

 YoY, 4Q13 PAT rose 5% to RM170.0m from SGD162.2m in 4Q12 despite revenue declining by 13%. This was mainly due to higher taxation of SGD53.0m in 4Q12 compared to SGD20.3m in 4Q13. For FY13, PAT grew 4% to SGD707.7m from SGD677.7m although top-line slid by 3%, due largely to lower taxation coupled with higher JV profit which included a c.SGD30m one-off disposal gain of a UK property in 3Q13.

 In 4Q13, RWS’ market share for the rolling chip volume dropped slightly to 53% from 54% in 3Q13 but still higher than 4Q13’s 49%. The non-rolling chip market share breakdown weakened to 43:57 in 4Q13 from 44:56 in 3Q13 between RWS and MBS.

 The daily average visitor to Universal Studios Singapore rose to 11,700 in 4Q13 from 9,900 in 3Q13 while the Marine Life Park saw its daily visitors number dropped slightly to 8,300 from 8,800. The hotel occupancy rate dropped to 92% from 94% in 3Q13. However, the average hotel room rate in 4Q13 improved to SGD411 from SGD405 in the preceding quarter.

Outlook  The management is cautiously optimistic of its casino operations especially the VIP segment given the uncertainty of the Chinese market. However, the strong SGD against the weaker regional currencies should have minimal impact on VIP business.

 It is positive on its new Jeju venture which will see construction work commencing in 3Q14 while the management is confident that the Japanese parliament will pass the first gambling bill in end-Jun/early-Jul.

Change to Forecasts   No change 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 for GENTING unchanged at RM12.55/share, based on a 20% discount to its SoP, pending the release of its 4Q13 results next Thursday.

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

Source: Kenanga