Genting Singapore PLC’s Latest Earnings: The Pain Continues

Genting Singapore PLC (SGX: G13) released its second-quarter earnings yesterday evening. The reporting period was for 1 April 2015 to 30 June 2015.

Genting Singapore is the operator of the iconic Resorts World Sentosa integrated resort that’s located in the heart of Sentosa island. The resort’s attraction would include the Universal Studios Singapore theme park and one of Singapore’s only two casinos.

You can learn more about the company in here or catch up with its previous quarter’s earnings here.

Financial highlights

The following’s a quick rundown on Genting Singapore’s latest financial figures:

  1. Quarterly revenue plunged 23% to $578 million compared to a year ago. This follows a big fall in revenue of similar magnitude that was recorded in the previous sequential quarter.
  2. Net profit attributable to ordinary shareholders for the quarter sank to a loss of $16.9 million, down significantly from the profit of $102.3 million that was seen a year ago. The majority of the fall in Genting Singapore’s profit came from unrealized foreign exchange losses and fair value losses recorded for its derivative financial instruments. This big dip in profitability had been foreshadowed by Genting Singapore when it issued a profit guidance last week on 4 August 2015.
  3. Consequently, Genting Singapore’s earnings per share (EPS) was a negative 0.14 cents in the second-quarter of 2015. This is down from the 0.83 cents per share that the casino operator recorded in the same quarter last year.
  4. On a brighter note, for the second-quarter of 2015, cash flow from operations was $333 million with capital expenditures clocking in at $27.2 million. This gives Genting Singapore positive free cash flow of $305.8 million. These figures represent an improvement from a year ago when cash flow from operations, capital expenditures, and free cash flow were at $282.5 million, $38.1 million, and $244.4 million, respectively.
  5. As of 30 June 2015, Genting Singapore had $4.4 billion in cash and equivalents and $1.7 billion in debt. This is up from the $3.2 billion in cash and equivalents and $1.96 billion in debt that the resort owner had at the same date last year.

In all, the pain of a revenue and profit decline is stinging Genting Singapore at the moment. This is a continuation of the slide that the firm had experienced in the previous quarter. On a brighter note, Genting Singapore still maintains a healthy balance sheet and generates positive free cash flow.

Notably, there was still around $930 million in assets on its balance sheet, as of 30 June 2015, which are classified as “available-for-sale” financial assets. My colleague Stanley Lim had previously expressed his concern about the asset class:

“Most of these assets are described as “compound financial instruments” in Genting Singapore’s annual report and very little information’s provided on them. Shareholders may want to try and find out more about these assets given their large market value.”

On another note, Genting Singapore’s trade and other receivables fell from $1.1 billion at the end of last year to $884.6 million on 30 June 2015. Foolish readers may recall that Stanley also previously highlighted his concern over the size of the firm’s current trade receivables. This may be an area to watch as well.

In the reporting quarter, Genting Singapore had suffered a $56.6 million impairment loss on trade receivables. Somewhat fortunately, this is down from the selfsame figure of $81.6 million seen a year ago.

Operational highlights

Revenue from Genting Singapore’s Gaming segment (the more important part of the business) was the main culprit for the firm’s overall revenue decline, falling a hefty 28% from $596 million in the second-quarter of 2014 to $428 million in the second-quarter of 2015. Elsewhere, revenue from the Non-gaming segment did relatively better with a 3% year-on-year dip.

In the earnings release, Genting Singapore’s management team opined that the big fall in revenue was due to unfavourable global VIP premium business amidst a weak environment for the gaming industry. The management team also stated that they will continue to focus on the foreign premium mass and mass market segments in the region.

On a more positive note, Genting Singapore oversaw the opening of its 557-room Genting Jurong Hotel at the end of April 2015. Occupancy for the hotel has been “encouraging.”

Meanwhile, the non-gaming segment had benefitted from the re-launch of the Battlestar Galactica dueling roller coasters in Universal Studios Singapore and the introduction of the “Puss in Boots’ Giant Journey.” Genting Singapore reported that its attractions had exceeded daily average visitation of 18,000 during the reporting quarter, up 9% year-on-year. Meanwhile, the company’s hotels have maintained an occupancy rate of 93%.

Foolish summary

At its closing price yesterday of $0.785, Genting Singapore traded at around 41.3 times its trailing earnings.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.