The 2 Different Ways Genting Singapore PLC Makes Its Money

Genting Singapore PLC (SGX: G13) is one of Singapore’s largest listed companies. But, the market hasn’t been kind to the company over the past few years – Genting Singapore’s current stock price of S$0.75 is 31% lower compared to two years ago.

When I dug into the company’s results, I found a possible reason for the fall in its stock price: Its profit has been falling.

In 2014, Genting Singapore’s profit attributable to shareholders was S$517 million, down 12% from 2013; in 2015, the self-same figure was just S$75.2 million. The first-half of 2016 saw a continuation of the trend – profit attributable to shareholders was down a stunning 99% compared to the first-half of 2015.

I thought it would be interesting to better understand the different ways Genting Singapore makes its money to have a better handle on why its business performance has weakened over the past few years.

Here’s a breakdown of the company’s revenue in 2015:

Source: Genting Singapore 2015 annual report

We can see that the company has two main sources of revenue: Gaming and non-gaming. Genting Singapore’s main business now is the integrated resort, Resorts World Sentosa. Among the resort’s many attractions are one of Singapore’s two casinos and the Universal Studios Singapore theme park. The company has also entered into a joint venture in South Korea to develop Resorts World Jeju. The resort is expected to open in 2017.

The Gaming segment, which contributed to 73% of Genting Singapore’s total revenue, represents revenue from the companys casino business within Resorts World Sentosa. As you can see, the segment’s revenue fell hard in 2015. This is mainly due to weakness in the VIP gaming business.

Genting Singapore’s Non-gaming operations is related to the various businesses within Resorts World Sentosa, excluding the casino. Besides Universal Studios Singapore, the integrated resort also has S.E.A. Aquarium (one of the world’s largest aquariums), various hotels, food and beverage retail outlets, and more.

This segment’s performance was relatively stable, with revenue in 2015 being only marginally lower compared to 2014.

By breaking down Genting Singapore’s revenue segments, investors can have a better understanding of its business and, hopefully, make a better judgement on the attractiveness of the company as an investment.

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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 Lawrence Nga doesn’t own shares in any companies mentioned.