Hedge your bets: Tepid mass market growth feared to hamper Genting's outlook

VIP segment may also be lacklustre.

Despite the record numbers in 1Q14, management remains largely cautious for the rest of 2014. According to OCBC Investment Research, Genting Singapore is not optimistic that the mass market will have any significant growth in the next few months, mostly due to the continued strength of the SGD against the regional currencies.

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And for the VIP segment, GS notes that it is still heavily dependent on the region, and the outlook remains quite uncertain, citing the slowing Chinese economy as well as the presidential election in Indonesia.

Nevertheless, management did reveal that it has achieved a greater diversity of VIP customers, which it also credited for its outperformance against rival MBS in 1Q14.

Strong start to FY14

Genting Singapore (GS) reported its 1Q14 results last evening, with revenue jumping 24% YoY and 20% QoQ to S$828.8m, or 4% above our forecast, aided by better-than-expected win percentages (VIP hold rate hit 3.0%, at the upper end of the theoretical range), which also resulted in adjusted EBITDA jumping 60% YoY and QoQ to S$400.3m (48.3% margin versus 36.1% in 4Q13 and 37.3% in 1Q13).

NPAT surged 97% and 63% QoQ to S$228.5m; core NPAT of S$207.2m was 73% above our S$120m estimate.

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