The Good And The Bad: Important Takeaways From Genting Singapore PLC’s Latest Earnings

Genting Singapore PLC (SGX: G13) is the owner and operator of one of Singapore’s tourism landmarks, 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 reported its 2017 first quarter earnings two weeks ago. There are both positive and negative takeaways from the announcement that investors may want to learn about. Let’s take a look, starting with an overview of the numbers:

1. The overall result

Here’s a table showing some of the important items from Genting Singapore’s income statement for the first quarters of 2017 and 2016:

Source: Genting Singapore 2017 first quarter earnings release

Despite experiencing lower revenue, Genting Singapore managed to grow its gross, operating, and net profits.

2. The positives

Firstly, Genting Singapore’s profitability had improved significantly. This was due to lower impairment of receivables and better cost management.

Secondly, the company continues to generate a significant amount of operating cash flow and free cash flow – in the first quarter of 2017, the two cash flow numbers were S$301 million and S$283 million, respectively.

Lastly, there is potential for future growth as Genting Singapore is planning to bid for a gaming license in Japan; the country had passed a law to legalise casinos only in late 2016. The company has a strong balance sheet at the moment (S$5.64 billion in cash and equivalents, and total borrowings of just S$1.08 billion), so that can provide the resources needed to pursue the Japan opportunity.

3. The negative

Despite achieving sequential revenue growth, Genting Singapore’s revenue in the first quarter of 2017 was down on a year-on-year basis as mentioned earlier. In fact, both the gaming and non-gaming segments each experienced a 4% decline in revenue when compared to the first quarter of 2016.

In other words, it is important that investors look out for a sustainable turnaround in Genting Singapore’s revenue before declaring that the headwinds experienced by the company in the past few years are behind it.

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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.