Period  1Q14 for Genting Singapore Plc. (GENS)

Actual vs. Expectations GENS’ 1Q14 results were stronger-than-expected with PAT of SGD257.6m making up 37% of consensus’ FY14 full-year estimates. The adjusted EBITDA of SGD400.3m made up 29% of our FY14 full-year estimates and 28% of market consensus. This was mainly driven by the record high rolling chip volume of c.SGD18.6b.

Dividends  No dividend was declared, as expected.

Key Results Highlights 1Q14 PAT leapt 51% QoQ to SGD257.6m on a 20% hike in revenue, due to the strong surge in rolling chip volume which jumped 19% to c.SGD18.6b from c.SGD15.5b previously, coupled with improved luck factor of 3.0% from 2.5%. However, non-gaming revenue dipped 15% QoQ largely due to declines in visitations and room rates.

 On the other hand, the 1Q14 PAT also surged significantly by 77% YoY as topline grew 24% over the year. In addition, a 10% YoY growth in VIP business volume and the relatively better luck factor in 1Q14 of 3.0% vs. 1Q13 of

2.12% also contributed to the strong earnings growth. The non-gaming revenue posted a 6% growth from new attractions, higher visitation and room rates.

 At the expense of MBS, RWS’ market share for the rolling chip volume rose to 59% in 1Q14 from 53% which was far better than the 48% reported in 1Q13. This was the third straight quarter that RWS beaten MBS in terms of VIP market share. However, RMS remained an underdog for the mass market with non-rolling chip market share improving slightly QoQ to 44% from 43% but still weakened YoY from 47% recorded last year.

 The daily average visitor to Universal Studios Singapore dropped to 9,600 in 1Q14 from 11,700 in 4Q13 while the Marine Life Park saw its daily visitor number dropped slightly to 6,400 from 8,300. The hotel occupancy rate was maintained at 92% but room rates declined marginally to SGD409 in 1Q14 from SGD411 in 4Q13.

Outlook  The management remains cautiously optimistic of its VIP business segment given the slowdown in the Chinese economy while one of its key markets, Indonesia is conducting its presidential election. The mass market will remain flattish in the coming months while the strong SGD against regional currencies would impact the non-VIP segment.

 Its new Jeju venture will get the building permit by mid-June and paving the way for a soft opening in early-2017 while the Japanese’s Upper House is scheduled to read their Casino Introduction Bill in early-June.

Change to Forecasts

 No change to our GENTING’s FY14-FY15 EBITDA estimates for GENS.

Rating NOT RATED for GENS, OUTPERFORM for GENTING.

Valuation  We are keeping our price target for GENTING unchanged at RM12.81/share, based on a 20% discount to its SoP, pending the release of its 4Q13 results this month-end.

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

Source: Kenanga