Genting Singapore’s 1Q dragged by decrease in visitors

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Genting Singapore has suspended almost all operations at Resorts World Sentosa as they were deemed non-essential during Singapore’s circuit breaker period. — AFP photo

KUCHING: Genting Singapore reported adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of S$146.9 million for its second quarter of financial year 2020 (2QFY20), representing 25.2 per cent of consensus full year forecast.

Researchers with Hong Leong Investment Bank Bhd (HLIB Research) deemed this to be below expectations largely due to lower than expected operating margins coupled with the likely absence of operations for most of 2QFY20.

The casino’s revenue decreased by 33 per cent to S$406.9 million largely due to the decrease in traffic from the initial Covid-19 scare back in February.

Correspondingly, adjusted EBITDA fell by 48.9 per cent in line with revenue in addition to lower operating margins.

Pursuant to the amendments to the listing rules of the Singapore Exchange which took effect on February 7, 2020, Genting Singapore has decided not to continue with quarterly reporting and will instead release financial statements on a half-yearly basis.

Nonetheless, Genting Singapore has provided a voluntary business update in respect of 1QFY20 which includes revenue and EBITDA figures but no earnings before interest and tax, profit before tax and profit after tax and minority interest.

“The Singapore government had extended the circuit breaker measure by four weeks till June 1. As such, Genting Singapore has suspended almost all operations at Resorts World Sentosa as they were deemed non-essential,” HLIB Research observed.

In light of the decrease in economic activity due to Covid-19, Singapore’s Job Support Scheme essentially provides wage support for local workers up to a period of 9-months until end-2020.

The scheme covers employees from all sectors except government organisations and representative offices with a 25% wage support up to the first SGD4.6k gross monthly salary.

Furthermore, employees within severely-affected sectors such as hotels and gated tourist attractions will be provided with 75 per cent instead of the blanket 25 per cent.

“Based on Genting Singapore’s FY19 salaries of S$448 million paid to about 12,500 employees, this translates to S$3,000 per month which is well below the threshold,” HLIB Research estimated.

“As such, we estimate Genting Singapore to save up close to S$150 million for its local staffers in FY20, by assuming a non-casino to casino staff ratio of 75:25. We reckon that the group is on a relatively stronger footing to ride through this outbreak given its war chest of close to S$3.7 billion in net cash.”

Following the cessation of participating in the Osaka bid, Genting Singapore has been engaged in the ongoing Request for Concept by Yokohama City and is anticipating the launch of the Request for proposal by the second half of 2020. Other participating bidders include Wynn, Galaxy, Sega Sammy, and Melco.

Meanwhile the world’s largest casino company, Las Vegas Sands Corp, has recently pulled out of the Japan IR race as it plans on focusing its resources on other opportunities.