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Genting Singapore Poised for Growth with Increased Chinese Tourism and Potential Thai Expansion
January 18, 2024
As Singapore’s vibrant tourism sector rebounds, Genting Singapore Ltd (SGX:G13) is strategically positioned to capitalise on this upsurge, particularly with the influx of Chinese tourists.
Singapore’s recent decision to grant 30 days visa-free entry to Chinese visitors is a pivotal move that Genting Singapore stands to benefit from significantly.
This policy change is expected to stimulate a resurgence in visitation to Resorts World Sentosa (RWS) from Chinese tourists, contributing to the company’s bottom line.
Resilient earnings despite lower Chinese tourists than pre-COVID level
Genting Singapore’s gaming operations, a critical revenue generator, have exhibited remarkable resilience and growth.
Even before Q3 2023, the company’s mass market segment, traditionally contributing approximately 75% of earnings, had reached pre-COVID levels.
This was achieved despite the absence of Chinese tourists, thanks to new migrants and wealth creation driven by higher property prices in Singapore.
Return of Chinese tourists in Q3 2023 boost earnings
The return of Chinese tourists in mass in 3Q23 catalyzed the mass market gross gaming revenue to rise to 8% above the FY19A quarterly average, with VIP volume soaring to 36% above the FY19A quarterly average.
Remarkably, the 3Q23 VIP volume of S$11.3 billion was the highest since the second quarter of 2015.
This resurgence is largely credited to the significant recovery in travel from China to Singapore, with December 2023 seat capacity reaching 87% of the levels seen in December 2019, according to OAG data.
Despite facing higher tax rates, the company’s earnings are expected to return to pre-COVID levels, buoyed by robust gaming revenues that have already surpassed pre-pandemic figures.
Furthermore, Genting Singapore is exploring opportunities beyond its home turf.
The company is reportedly considering a joint bid for a Thai integrated resort (IR) license, should Thailand liberalize its casino industry.
This potential expansion into Thailand represents a strategic move to diversify its portfolio and mitigate the impact of potential competition from Thai IRs.
The House always win
Genting Singapore’s strategic positioning, coupled with favourable policy changes and potential market expansion, puts it on a promising path for growth.
The company’s ability to tap into the burgeoning Chinese tourist market and explore new regional opportunities underscores its potential for a robust recovery and sustained success in the post-pandemic era.
Despite potential risks such as a looming recession, a slower-than-anticipated rebound in Chinese tourism, and inflationary pressures that could impact visitor spending, Genting Singapore’s current stock price, offering a dividend yield of 3.6%, makes it a noteworthy contender for your watchlist.
Disclaimer: ProsperUs Head of Content & Investment Lead Billy Toh doesn’t own shares of any companies mentioned.
Billy is deeply committed to making investment accessible and understandable to everyone, a principle that drives his engagement with the capital markets and his long-term investment strategies. He is currently the Head of Content & Investment Lead for Prosperus and a SGX Academy Trainer. His extensive experience spans roles as an economist at RHB Investment Bank, focusing on the Thailand and Philippines markets, and as a financial journalist at The Edge Malaysia. Additionally, his background includes valuable time spent in an asset management firm. Outside of finance, Billy enjoys meaningful conversations over coffee, keeps fit as a fitness enthusiast, and has a keen interest in technology.