Game On – Insights On Genting Singapore

03 Aug 2022

By Eric Lee, Sales Director, Phillip Nova

Since opening its borders to fully vaccinated travellers from 1 April 2022, Singapore has been experiencing gradual month-on-month gain in its number of visitors. Based on data from the Singapore Tourism Board (STB), the garden city welcomed a little over 500 thousand visitors in June 2022, which makes up to about a third of its monthly numbers pre-covid. STB expects up to 6 million visitors in 2022 and for arrival numbers to return to pre-covid levels by 2025.

The table below shows the cash distribution of Genting Singapore in the 5 years prior to 2020. There isn’t much growth prospect as we can see that the total revenue of Genting Singapore had hovered around $2.5b per year. This is likely because its business is largely confined to Resorts World Sentosa. However, the company is a great cash generating machine, averaging 40% Free Cash Flow margin yearly. As a result, Genting Singapore’s management had been rewarding its shareholders with dividend yields of 3-4% and actively paying down their debt from $3.2 billion in 2011 to just $200 million currently.

Similar to the rest of the hospitality sector, Genting Singapore’s business had suffered greatly as tourist arrival numbers had plummeted due to intense border lockdown measures taken by governments all over the world to limit the spread of the coronavirus. Its revenue had dropped 60% and profit by more than 90%. Yet, even in the worst of times, Genting Singapore was still able to maintain some profitability. As a result of its strong balance sheet, the company did not need to raise any debt, unlike many others in the travel and hospitality sector.

As the world gradually opens their borders and learn to live with covid, Genting Singapore’s shareholders should be able to benefit greatly from the travel recovery as profit need not be shared with other debtholders due to Genting Singapore’s almost negligible debt level.

Based on Bloomberg’s consensus estimates (as shown on the table above), analysts are expecting Genting Singapore’s revenue to reach 90% of its pre-covid levels by 2023. Assuming the company is unable to return to its average Free Cash Flow margin of 40% due to increase in costs, their FCF margin will instead remain at 30%. Any cash distribution as interest expense of debt repayment will not be significant as Genting Singapore’s debt is low. It should be not too far-fetched to assume a Free Cash Flow of $700 million per year by 2024.

As one of the 2 integrated resorts in Singapore and the only theme-park in the country, Resorts World Sentosa should likely be on the top of the list of must-see destination for tourists planning to visit. Over the past decade, tourist arrivals here had grown at a compounded rate of 4% p.a. until the disruption the pandemic has caused. Once the number returns to the 2019 level, there’s a good chance that it will resume on this trajectory of 4% growth per year.

Genting Singapore is expected to release its 1H 2022 results on 12 August 2022. However, recent result announcement by Las Vegas Sands (LVS), which wholly owns and operates Marina Bay Sands (MBS), gave investors a cause for celebration. As shown above, even though Singapore had only opened for vaccinated travellers for 3 months and tourist arrivals are only at a third of its peak, MBS already reported that its net revenue for Q2 2022 is 80% of its Q4 2019 results.

Charting wise, since 2020, Genting Singapore had been consolidating into a possible Ascending Triangle formation with its breakout level at $0.93. The recent bounce from $0.70 for the 3^rd time could imply that we have a significant support at $0.70. Investors who are bullish in the prospect of Genting Singapore can look to buy if price falls back close to $0.75. Once the resistance of $0.93 is broken through, the next resistance to look out for it at $1.20.

Genting Singapore is available for trading under Phillip’s MT5 account as a CFD contract.

Value-Added Service

Periodically, I will be sending out market analysis like this to my clients, as well as alerting them when the trading strategies I used indicated potential entry and exit signals. Click on the button at the bottom if you would like to arrange for a One-to-One Coaching session to learn more about trading futures & forex, and how you may benefit from the services I provide.

Eric Lee is a Sales Director with Phillip Nova. With expertise in Futures, Forex, Stocks, and Unit Trust, Eric makes an all-rounded advisor. Make informed trading decisions without spending time combing through endless information as Eric readily provides clients with trade alerts and insights via WhatsApp. Over his years of experience, Eric developed systematic strategies in trading and investing. Book a complimentary coaching session below to leverage on his expertise as he imparts his knowledge to enhance your trading journey.

Free Phillip Nova Demo Account
Free Phillip MT5 Demo Account
Receive S$100* when you open an account!
*T&Cs apply, contact Eric below for more information.

Click here for a free coaching session with Eric

An Exchange Traded Fund (ETF) is a marketable security that is formed to track nearly anything, ranging from a specific index, sector, commodity, or increasingly, theme. They are most commonly used to track a basket of stocks, and can typically be accessed through the same channels as regular stocks. ETFs are typically separated into passively-managed ETFs that simply mirror the security they are tracking (e.g. the STI), and actively managed ones that attempt to deliver higher returns or specific investment objectives, often with a pre-specified theme in mind (e.g. ARK Invest’s Innovation ETF).

Why should I trade in ETF CFDs?

ETFs have been growing in popularity over the years. 2020 was the best year for ETFs yet, with global equity ETFs seeing more than $1T in inflows within a 12-month period. Using CFDs to gain exposure to ETFs allows for greater capital efficiency because only a portion of the contract value is required as margin to establish a position.
ETFs are particularly popular with investors seeking a relatively hassle-free investing experience, while desiring exposure to a range of specific and relatively understandable securities. Trading ETF CFDs brings greater convenience by eliminating the need for traders to hold multiple currencies in order to access global ETFs.
An investor wanting exposure to the post-pandemic economic recovery could open a position in the well-known SPDR S&P 500 ETF (SPY), which tracks the performance of the S&P 500. Another investor that may be convinced of the future importance of Environmental, Social and Governance concerns (ESG) may find the increasing selection of ESG-themed ETFs that track a basket of high ESG-rating companies to be a good investment, rather than cherry-picking individual equities by hand. ETF CFDs can act as a powerful tool for traders can profit from both directions of the market by taking on long or short positions.

A look at two ETF CFDs we offer:

1) Has the ARKK been sunk?

ARK Innovation ETF (ARKK) ARKK is an actively managed ETF by ARK Invest that invests in a range of companies based on their innovative and industry-disrupting potential. ARKK’s largest holdings are in companies such as Tesla, Square, and Zoom. ARKK is down around -33% from peaking on 12^th Feb and is currently in the red for the year to date as the market experiences a risk-off outflow of funds. Superstar fund manager Cathie Wood has however been consistently doubling down on her bets, buying even more shares in growth stocks that are going through their own tumultuous periods such as DraftKings, Peloton, Teladoc, and Tesla. In her view, ARKK is playing the long game, and remains steadfastly convinced in the long-term prospects of these growth stocks beyond this current bout of volatility. Similarly on outflows, investors are still betting big on ARKK as ARK Invest has only lost about $1.2B in assets this year across all its six funds, compared to seeing an inflow of $15.1B during the same period. Recently, investors have been nervously eyeing ARKK’s basket of tech stocks as their future earnings potential remain vulnerable to erosion through high inflation – the dominant concern of the market in recent weeks. As commodities – the major contributor to the recent heightened inflation fears – drops sharply from record highs, are investor concerns over hyperinflation overblown?

2) Searching for exposure to Asian equities?

iShares MSCI Asia ex Japan ETF (AAXJ) The AAXJ is currently trading -10.6% adrift of all-time highs seen in February, giving up gains in tandem with an Asia-wide equity sell-off at the time. Given that slightly over 40% of the ETF’s holdings are based in China, the ongoing tumult seen in Chinese equities currently have carried over nearly perfectly in the AAXJ, as Chinese investors take a breather after the stellar gains made over the past year. Looking ahead, Asia – and particularly China, is steaming ahead with its economic recovery. China is widely expected to be one of the best-performing major economies this year, providing a major boost to the outlook for corporate earnings. As the rest of Asia and the world gradually opens up their own economies, AAXJ is likely to again benefit from strong Asian outperformance amidst a strengthening trade outlook.

CFD is available for trading on Phillip MetaTrader 5 (MT5).

Features of trading CFD:

Trade in both the bull and the bear markets
The ability to enter a long and/or short position allow traders to take advantage of both rising and falling markets.
Smaller barrier to entry
Flexible and smaller contract sizes. This means that traders will be able to enter into a contract with a modest amount of capital.
No expiration date or risk of delivery
Unlike futures which commonly have a fixed expiration date, CFD allows traders to perpetually hold the position(s). CFD is cash settled, no need to worry about the delivery of the underlying asset.

Benefits of using Phillip MT5:

Trade at zero commission on a dynamic platform that offers low spreads. Integrated with Autochartist and Trading Central Indicators, and available on mobile, web and desktop app, you will never miss a trading opportunity with Phillip MT5.

Register for a FREE 30-day Phillip MetaTrader 5 Demo Account

More Market Trends

12 Nov 2024

Weekly report courtesy of Eurex A jubilant mood on Wall Street, sideways movement on Europe’s stock markets – after the turbulent previous week, events still

Client Portal