KUALA LUMPUR (May 14): Hong Leong Investment Bank Bhd raised its Genting Singapore Ltd share target price (TP) to S$0.79 from S$0.59 but lowered its earnings forecast for the casino and resort operator after the group reported first quarter numbers that were below market expectations due to the impact of the Covid-19 pandemic.

Yesterday, Genting Singapore said in a filing with the Singapore bourse that for the first quarter ended March 31, 2020 (1QFY20), the group recorded revenue of S$406.9 million, a 36% decline compared with a year earlier.

"The group also reported adjusted earnings before interest, tax, depreciation and amortisation (adjusted Ebitda) of S$146.9 million for the first quarter of 2020, a 55% decrease year-on-year. The impact of the Covid-19 outbreak was first felt in late January, with the situation worsening over the course of the quarter. The situation has developed into a global pandemic of unprecedented proportions, resulting in many countries, including Singapore, implementing travel restrictions and border closures to contain the spread of the virus,” said Genting Singapore, which is a 52.66%-owned subsidiary of Malaysia-listed Genting Bhd.

Today, Hong Leong analyst Andrew Lim Ken-Wern said the research firm lowered its Genting Singapore FY20 earnings forecast by 12.8%, as Hong Leong imputed lower gaming volumes in the near term.

"Share price may potentially remain subdued in the near term given the fear of the Covid-19 impact, which does not bode well with Genting Singapore. On the other hand, a net cash position of S$0.31 per share and potential news from Japan pertaining to the casino bill should serve as a support to share price,” Lim said.

Nomura analyst Tushar Mohata wrote in a note that with “circuit-breaker” lockdown measures in place in Singapore since April, and Genting Singapore’s resort essentially shut, 2QFY20 will likely see a bigger year-on-year contraction in Genting Singapore’s revenue compared with the quantum in 1QFY20. 

The analyst said Genting Singapore’s "momentum should improve from 3QFY20 as restrictions ease".

Genting Singapore has ceased quarterly financial reporting following recent amendments to the listing rules of the Singapore Exchange Securities Trading Ltd that took effect on Feb 7, 2020. The company will, however provide voluntary quarterly business updates to shareholders in respect of each of the first and third quarters ending March 31 and Sept 30 respectively, according to Genting Singapore’s statement in March 2020.

At the Singapore bourse today, Genting Singapore’s share price fell three sen or 3.92% to S$0.74 at 2:51pm for a market capitalisation of S$8.81billion (about RM26.88 billion).

At Bursa Malaysia, Genting Bhd’s share price dropped four sen or 1% to RM3.97 for a market value of RM15.29 billion.