Genting Singapore, which operates Resorts World Sentosa, is likely to report subdued Q4FY2024 numbers, says CGS International's Tay Wee Kuang.
In contrast, Marina Bay Sands, held by parent company Las Vegas Sands, enjoyed record high mass gross gaming revenue.
"We think MBS benefited from its ongoing suite renovation and refurbishment programme," suggests Tay in his Feb 3 note.
Meanwhile, Resorts World Sentosa has been renovating 384 rooms since last March. Along with other upgrading works on the Universal Studios and the SEA aquarium, potential visitors might have thus been turned away, says Tay.
The contrast between the two integrated resorts aside, Tay observes that the overall recovery in Singapore tourism seems "stunted".
According to the Singapore Tourism Board, there were 1.2 million international visitor arrivals (IVAs) in November, making up only 80.5% of 2019 pre-pandemic levels.
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This comes after monthly IVAs recovered to 94.6% in March 2024 following various blockbuster events, such as the airshow and Taylor Swift and Coldplay concerts.
"We think this suggests that Singapore’s attractiveness as a tourist destination is driven by events rather than attractions," says Tay.
"With an inferior line-up of events in 2025, we expect Singapore’s IVA for 2025 to come in comparable to 2024’s, which could translate to a lack of volume-driven growth for Genting Singapore ," he adds.
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Nonetheless, citing how Genting Singapore is now trading at "depressed valuations", Tay has kept his "add" call on this counter.
He is also looking forward to a significant lift in earnings in the second half of FY2025 with the gradual rollout of its new attractions, such as the newly-revamped Hard Rock Hotel, Minion Land in Universal Studios as well as the Singapore Oceanarium.
Tay has kept his target price of $1.05 as well, which is pegged at 8x FY2026 EV/EBITDA, 0.5 s.d. below its 5-year mean given near-term uncertainty of the recovery in the Singapore tourism sector.
For Tay, re-rating catalysts would include bumper quarterly earnings from higher-than-expected win rates and higher tourist arrivals.
Downside risks, meanwhile, would stem from delayed completion of construction works and higher bad debt recognition.
Genting Singapore is the most heavily traded counter this morning, changing hands at 75 cents.
