Is There Room To Grow For Genting Singapore PLC?

Genting Singapore

Casino resort operator Genting Singapore PLC (SGX: G13) announced its second quarter results just yesterday. Investors who feel that the company might be lacking the potential for growth after the 2010 opening of its flagship Resorts World Sentosa might want to reconsider the notion.

Double digit year-on-year growth

For the six months ended 30 June 2014, Genting Singapore managed to grow both its top- and bottom-line by double digit percentages. The company ended the first half of the year with sales of S$1.58 billion, some 15% higher compared to a year ago, fuelled by a 19% jump in gaming revenue to S$1.27 billion. A much higher win percentage in the premium player segment had helped to provide the boost to gaming revenue.

The company’s gross profit improved even faster as it grew 32% year-on-year to S$624.7 million. All told the company ended the second quarter with net profit of S$389.2 million, up 24% from a year ago.

A strong balance sheet

Genting Singapore continues to be in a net cash position. As of 30 June 2014, the company had S$3.17 billion in cash and S$1.96 billion in debt, translating into a net cash (total cash minus total debt) position of S$1.21 billion. That’s a very strong balance sheet and provides the company with fire power to expand its business.

There’s an interesting point to note about Genting Singapore’s balance sheet though. The company has more than S$2.1 billion worth of financial assets that are available for sale – that seems a rather high amount to have, in my opinion, for a company with on-going operations.

Foolish Summary

Resorts World Sentosa in Singapore might only be the first step for Genting Singapore.

In its earnings release, the company touched upon its main future growth drivers. The first is its plan to build an integrated resort in Jeju Island, South Korea; the relevant authorities have been briefed and the company’s now working on finalising the development plans and securing the necessary approvals before work can start.

The next centres on discussions the company’s having in Japan regarding the potential development of casino resorts in the country if the Integrated Resorts Promotion Bill (currently, casinos aren’t allowed in Japan but the bill is trying to change that) is passed by the Japanese government; the company is “optimistic that the Bill will pass before the end of this year.”

These initiatives, if successful, might bring Genting Singapore to much greater heights than today.

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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 contributor Stanley Lim doesn't own any shares of companies mention above.