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Genting Singapore: The Worst Performing Blue Chip In 2014

We’re now mid-way through the third month of 2014. Since the end of 2013, Singapore’s stock market hasn’t done anything collectively to set investors’ hearts racing. Take the market benchmark, the Straits Times Index (SGX: ^STI), for instance – it ended 2013 at 3,167 points and since then, has dropped by 3.2% to its current level of 3,074 points.

But while the index hasn’t done much for investors in the current year so far, for certain blue chips, 2014 has been an even more forgettable year. Chief amongst such blue chips would be Resorts World Sentosa owner Genting Singapore (SGX: G13), which has dropped 12% in price to S$1.315 from S$1.495 at the end of 2013, making it the worst performing blue chip year-to-date.

The company’s performance for the whole of 2013 was revealed on 20 February 2014 when it released its earnings results. The headline figures would not exactly instil confidence in investors: Revenue was 3% lower at S$2.85 billion while profits only inched up by 1% to S$589 million. Given such a backdrop, it’s perhaps not a real surprise to see Genting Singapore’s shares not doing well of late.

Genting Singapore’s gaming business (the casino within Resorts World Sentosa) accounts for more than three quarters of the company’s total sales and revenue from there fell 8% to S$2.185 billion as the roll of the dice did not favour the company – it had registered lower win percentages, so much so that even higher gaming volume in the premium gaming business couldn’t stem a decline in revenue.

It wasn’t all gloomy with the company however, as non-gaming revenue (which includes Universal Studios Singapore, S.E.A. Aquarium and a myriad of hotels, retail stores and food & beverage outlets) grew. In 2012, these non-gaming activities brought in revenue of S$558 million and it has since grown by 18% to S$660 million in 2013. Resorts World Sentosa had seen strong visitor numbers for all its attractions, which provided the fuel for growth in the non-gaming segment.

Meanwhile, the company’s certainly not running on a treadmill as it’s taking some concrete steps to grow. Last year, Genting Singapore had spent S$330.8 million on capital expenditures, which includes the purchase of a plot of land in the Jurong Lake district of Singapore for the development of a hotel that’s slated for opening in 2015.

In addition, the company’s also venturing into Korea for some valuable exposure and experience in operating in the North Asian region. Genting Singapore’s partnering with a Hong Kong-listed property developer, Landing International Development, to co-develop and operate an integrated resort in Jeju Island. During Genting Singapore’s earnings release, the company noted a “sizeable” market for the upcoming tourist attraction and the possibility of synergy with Resorts World Sentosa.

While Genting Singapore’s shares have not done well this year, it’s been a proven long-term winner over the past decade with its shares up 511% from S$0.215 on 14 March 2004, the reason being its corporate performance has improved tremendously since Resorts World Sentosa started its nascent operations in 2010. A currently-depressed share price might yet prove to be a bargain if the various growth initiatives Genting Singapore has in place at the moment do come to fruition in the future.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Chong Ser Jing doesn’t own shares in any companies mentioned.