What Investors Should Know From Genting Singapore PLC’s Latest 2016 Results

Genting Singapore PLC (SGX: G13) is one of largest companies in Singapore’s stock market. It is also likely to be a company that many in Singapore recognise given that it is the owner of an important tourism landmark here, 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.

Last week, Genting Singapore reported its 2016 full year results. There are both positives and negatives about the company’s latest earnings that investors may want to learn about. Let’s take a look, starting with an overview of the numbers.

1. The overall numbers

Here’s a table showing selected items from Genting Singapore’s income statement from 2016 and 2015:

Genting Singapore selected income statement numbers
Source: Genting Singapore 2016 full year earnings release

We can see that despite bringing in lower revenue, all of Genting Singapore’s profitability metrics were either flat or up in 2016. In fact, the company’s net profit in 2016 almost doubled.

2. The positives

Firstly, beyond the big jump in profit, Genting Singapore continues to generate significant amount of operating cash flow. In 2016, the number was S$1.16 billion, which is significantly ahead of the company’s 2016 net profit.

Secondly, Genting Singapore’s non-gaming business continues to be resilient, with revenue down by “only” 2% in 2016. Resorts World Sentosa’s attraction businesses welcomed around 18,000 visitors daily on average, while its hotels registered a high occupancy rate of 92% during the year.

Lastly, there is potential for future growth as Genting Singapore is exploring the potential to bid for a gaming license in Japan; the country had recently legalized the opening of casinos. The company thinks its balance sheet is strong enough for it to make a good bid if it so wishes.

3. The negatives

For one, Genting Singapore’s gaming business faced challenges in 2016 with a 9% decline in total revenue.  Although gaming revenue for the company in the fourth quarter of 2016 was higher than in the same quarter in 2015, investors may still want to pay close attention on whether the turnaround can be sustained.

Secondly, despite enjoying strong profit growth in 2016, Genting Singapore’s adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) fell by 15% in the year.

As the financial number excludes one-off items and other non-cash transactions, it is a good proxy for Genting Singapore’s long-term business performance. So far, this number has yet to pick up after a multi-year decline.

In sum, Genting Singapore’s 2016 financial performance had a much more positive tone as compared to the previous two years. But, investors should keep an eye on whether this turnaround can be sustained.

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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.