Affin Hwang maintains buy on Genting as Singapore unit delivers positive results

KUALA LUMPUR: Genting Singapore delivered positive 1H18 results as its VIP segment continued to grow, gaining more market share at the expense of its competitors. 

"PATAMI came in at S$395m (+23% yoy) driven by the VIP segment, which volume grew by
27% yoy as it expended its market share to 50%," said Affin Hwang research in its Monday note. 

The research house added that the Genting Group subisidary delivered 53% and 50% of its and consensus 1H adjusted Ebitda forecasts.

Affin Hwang said management's decision to further extend credit to its customers has helped drive 27% year-on-year growth in its VIP volume, with market share improving to 50% in 2Q18 from 34% in 2Q17.

However, revenue and Ebitda remained lower year-on-year due to the low win rate and some weakness in the mass market also had a negative impact on margin.

"Its mass market is facing stronger competition from the regional players, but has intensified recently with the opening of new casinos in the Indochina region. 

"We nevertheless believe that this could be a blip, as the shift in demand could be due to novelty effect, and could normalised in the coming quarters," said Affin Hwang.

The research house maintained its buy call on Genting Group following the results of its Singapore unit, and target price of RM12.80.