The Three Numbers That Integrate Genting Singapore

It is almost impossible for any visitor to Singapore to ignore Genting Singapore (SGX: G13). Whether you get your kicks at the card tables or get them by soaring through Jurassic Park at Universal Studios, Genting Singapore has a thrill for you.

The company is one of Singapore’s two Integrated Resorts that attracts both local visitors and guest from other countries. It has also been a good investment for long-term investors. Since the Millennium, Genting Singapore has delivered a total return 326%, which equates to an annual return of 10.3%.

The returns are similar to the average Return on Equity (RoE) that the company has delivered over the last five years. In the last 12 months, its RoE, which has been driven by a high Net Income Margin (NIM), has been 7.7%.

Genting Singapore’s Net Income Margin is an above-average 25.6%. It implies that the company has generated S$25.60 for every S$100 it rings up in its tills. By comparison, the NIM for the 30 companies that make up the Straits Times Index (SGX: ^STI) is 14.8%.

However, Genting Singapore’s Asset Turnover is an uninspiring 0.23. It suggests that the company is only able to wring out $0.23 of sales for every dollar of asset employed. By comparison, the market average is 0.5. The low asset turnover is not entirely unexpected. Just one quick look at the sprawling operation could help explain why.

Interestingly, Genting Singapore is not highly leverage. The Leverage Ratio is a below-average 1.3. Currently, the company is sitting on cash of S$3.1b compared to total debts of S$1.96b.

By dismantling the Return on Equity of Genting Singapore, it is easy to see how the company integrates the numbers. Its Return on Equity of 7.7% is the product of an above-average Net Income Margin of 25.6%; a low Asset Turnover of 0.23 and a Leverage Ratio of 1.3.

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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 Director David Kuo doesn’t own shares in any companies mentioned.