Genting Singapore owns and operates our famous integrated resort, i.e. Resort World Sentosa (RWS). It has recently expressed pessimism over the outlook for the first half of 2020. And it is due to the massive disruption caused by novel corona virus (COVID-19).
That is not surprising to hear from Genting Singapore especially after a confirmed case involving a RWS staff was reported. But the economical impact of COVID-19 to tourism industry will not be meant for long term. When the weather turns warmer in the next few months, there is a better control over the virus spread. And this will eventually put a stop to this global emergency like H1N1 in 2009.
5 Reasons Why Genting Singapore Worth The Buy Now?
Great Mid Term Growth Potential Outside Singapore
Genting Singapore confirmed its intention to bid for a license to develop integrated resorts in both Osaka and Yokohama late last year.
During its 4 Feb 2020 extraordinary general meeting, Genting Singapore has received overwhelming approval from its shareholders to spend up to $10 billion for an IR bid in Japan. The bidding result will be out by early Q4 2020.
Genting Singapore had subsequently made an announcement last week to re- focus on their Yokohama bid instead of Osaka bid. My analysis on why Genting had dropped out Osaka bid is because of two reasons. The first reason is the condition imposed by Osaka Prefecture to build the Osaka IR by 2025 before their World Expo. The second condition is to have a consortium which involving local Japanese companies. Its competitor, MGM Resorts International became the sole qualified bidder for Osaka bid after partnering with the financial service provider, Orix Japan.
With its proven decade track records of operating RWS in Singapore, it may still stand a good chance to win 1 Integrated Resort license in Yokohama Japan. Winning bid result may be out by 2H2020. If you are tracking closely on Genting move, it may be hard to guess their next step because they are always quite secretive in their strategic move. To me, if they can win this Yokohama IR bid, it will be a super good bonus for the investors.
Great Mid Term Growth Potential In Singapore
It has committed to invest around S$4.5 billion. This is to revamp and expand its Resorts World Sentosa integrated resort. This will further help to maintain its current strong moat, i.e. USS being the Asia No.1 theme park position in the next decade.
Super Low Debt
With a strong financial track records, it maintains a very low debt position. Even if the result for 1H2020 or full year 2020 is expected to be badly hit, its strong financial standings can tide this giant easily.
Due to COVID-19 impact, its performance in 1H 2020 may be negatively impact. However, in its recent results announcement on 12 Feb 2020, Genting Singapore reported a 4 per cent rise in net profit to S$156 million for the fourth quarter of its financial year.
And if we look over a longer period of say 5 years, their earning per share is consistently improving. Therefore, its mid term outlook still look ok to me.
If you buy this stock now, you can get a decent annual dividend yield close to 4.5%. This is based on Genting Singapore share price at 88 cents closed today and assuming 4 cents annual distribution. The next confirmed dividend payout of 2.5 cents will be on 23 May 2020.
This dividend yield is not as fantastic as some of my other REITS. But it is still pay more than bank interests or interest of CPF ordinary account.
You might probably understand that i am not going for dividend play strategy here. Neither i bought Genting Singapore was due to the passing of all my value investing criteria. I bought it at its recent dip in stock price. This allows me to plant a seed for its good capital appreciation by end of this year or so.
In this case, i noted there is a crisis and opportunity happening at the same time now. Even if Genting Singapore does not win any successful bid to build and operate integrated resort at Osaka or Yokohama, its mid term potential still look brightful.
Do you agree Genting Singapore is worth the buy now? Share your comments here.
Note : The above is only my personal opinion and it does not constitute any investment advice. Please do your due diligence check.