Genting Singapore PLC’s Business: 3 Things Investors May Not Know, But Ought To

Genting Singapore PLC (SGX: G13) is likely to be a company well-known to many who live in Singapore. After all, the company is the operator of one of Singapore’s tourism landmarks, Resorts World Sentosa. The integrated resort houses one of Singapore’s two casinos and has many other attractions, such as a bevy of hotel concepts and the Universal Studios Singapore theme park.

Right now, Singapore is Genting Singapore’s key geographical market. But, the company has entered into a joint venture in South Korea to develop Resorts World Jeju, an integrated resort modelled after Resorts World Sentosa that is expected to open in 2017.

Over the past few years, Genting Singapore has been facing a challenging business environment, resulting in falling revenues and profits. This led to its share price having declined by 28% over the last two years.

Source: S&P Global Market Intelligence

Yet, there is more than meets the eye with Genting Singapore beyond the lower revenue and profit. Let’s take a look at some interesting aspects of its business fundamentals.

Stable non-gaming business

Genting Singapore splits its revenue streams mainly into the Gaming and Non-gaming segment. The former is pretty self-explanatory – it is where the casino-related businesses reside. The latter deals with the non-casino related business activities.

In Non-gaming, there are operations such as:

  • The aforementioned Universal Studios Singapore theme park,
  • One of the world’s largest aquariums, the S.E.A. Aquarium,
  • Singapore’s largest destination spa, ESPA,
  • A wide range of hotels, as already mentioned, and more.

Genting Singapore’s falling revenue over the past few years has been driven mainly by declines in the Gaming segment. The Non-gaming segment, on the other hand, has been relatively stable. In fact, Non-gaming revenue had managed to grow by 4% in the first-half of 2016 even when Gaming revenue slid by 15.3%.

Source: Genting Singapore earnings releases

Growing operating cash flow

I already mentioned that Genting Singapore’s profit has been falling in the past few years. Yet, sharp-eyed investors would have noticed that the picture is different when it comes to operating cash flow – the metric has been growing, as you can see below:

Source: Genting Singapore annual reports

A balance sheet with more cash than debt

Some companies with weak revenue- and profit-performances come with balance sheets that are saddled heavily with debt. That’s not the case with Genting Singapore.

As at June 2016, Genting Singapore has S$4.78 billion in cash and cash equivalents and just S$1.54 billion in total borrowings.

A Foolish Conclusion

Genting Singapore has been beset by falling revenue and profits over the past few years. But there are other facets of its business that are holding up well. By considering these, investors can make a more balanced judgement on the company’s business.

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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.