Genting Singapore - FY10 core net profit below expectations according to RHB
KUALA LUMPUR: RHB Research Institute said Genting Singapore plc's FY10 core net profit was below its expectations, but above consensus, making up 94% of its FY10 core net profit and 107% of consensus. 'The main reasons for the discrepancy were two-fold: 1) higher interest expense of RM95m in 4Q (+77.5%'' on-quarter); and 2) higher effective tax rate of 29% (ex-exceptional items) in 4Q. 'Note that on the topline and EBITDA levels, Genting Singapore's earnings were in line with our forecasts,' it said on Wednesday, Feb 23. RHB Research said revenue from RWS in Singapore rose 11.5% on-quarter, due to higher VIP volumes (+40% on-quarter), although this was offset slightly by weaker luck factor on a on-quarter basis. Gross gaming revenue (GGR) per day works out to about S$8.4m in 4Q10 (3Q10: S$8m), notably still about 33% above MBS' S$6.3m (or US$5m) per day. 'Annualising the YTD numbers, RWS and MBS' GGR per day imply a 58% market share for RWS (up from c. 55% in 3Q10) in 4Q10, while total annualised gaming revenue works out to be about S$5bn in 2010. This is 11% higher than our annualised projections of S$4.5bn for the year,' it said. RHB Research said there was o change to its FY11-12 forecasts. 'We introduce our FY13 forecast. We have however, trimmed our fair value to RM2.30 (from RM2.40), after : 1) rolling forward our DCF-based valuation to FY11; 2) updating our WACC assumptions; and 3) updating GS' net cash/(debt) position to 4Q10,' it said. RHB Research said in the near term, it does not think there are any catalysts for the stock, as the novelty factor has worn off and the IRs continue to grapple for market share. The next rerating for the stock may only come once the second phase is ready, depending on whether it is well-received, and this may bring RWS' earnings to the next stage of growth. For now, it maintains its Market Perform call on the stock.