Genting Singapore shares are undervalued despite drop in earnings, Morningstar says

[SINGAPORE] Genting Singapore’s shares are undervalued despite its recent weak earnings, but the new attractions being lined up could drive earnings growth, analysts said.

Morningstar’s senior equity analyst, Jennifer Song, has a fair-value estimate of S$0.96 for Genting Singapore shares.

The stock closed flat at S$0.715 on Friday (May 16).

Genting Singapore’s results were largely in line with analysts’ and market expectations, Song said in a Morningstar report on Thursday.

The company reported a sharp year-on-year revenue decline of 20 per cent to S$626.2 million, from S$784.4 million in the year-ago period. Net profit tumbled 41 per cent to S$145 million from S$247.4 million the year before.

“However, the results reflect a sharp year-on-year decline in revenue and net profit because of the high base a year ago; ongoing renovation disruptions from its RWS 2.0 project will also continue to weigh on second-quarter performance,” Song wrote.

Genting Singapore on Wednesday attributed the weaker performance to the resort’s lower VIP rolling win rate as well as the temporary closure of Hard Rock Hotel for renovation and rebranding works, which led to a reduction in available room inventory.

Additionally, the financials were weaker than in the previous year when Singapore had more visitors during the Chinese New Year season, along with the relaxation of visa regulations between China and Singapore in February 2024.

Citing the same reasons, Tay Wee Kuang of CGS International noted that Genting Singapore’s profit before tax had slightly missed expectations. However, the financial services provider is keeping an “add” call with an unchanged target price of S$1.05.

Both he and Morningstar’s Song expect earnings growth to pick up from the second half of 2025, on the back of the start and ramp-up of new projects and attractions. These include the launch of a super-luxury, all-suite hotel, the Singapore Oceanarium, and expanded retail and dining options.

“Although Genting has been losing gross gaming revenue market share to peer Marina Bay Sands in recent years, we anticipate the phased launch of its RWS 2.0 attractions to accelerate revenue growth and expand margins from the second half of 2025,” said Song.

Tay noted that the opening of attractions at Genting Singapore in H2 2025 could also provide a boost to the tourism sector.

“On top of driving visits by tourists, these novel offerings could also attract locals, in our opinion,” said Tay.

In a bourse filing on Wednesday, Genting Singapore also announced that chief executive officer Tan Hee Teck will step down from his role on May 31.

Shares of Genting-linked companies in Malaysia fell on Thursday as investors digested Tan’s surprise exit and fresh concerns over corporate governance.