DBS upgrades Genting to ‘buy’ amid huge cash reserves, constructive gaming environment

[SINGAPORE] DBS has upgraded its rating on Genting Singapore to a “buy” call, citing its cash reserves as having potential to drive shareholder value.

The bank assigned the operator of Resorts World Sentosa a target price of S$0.90, 12.5 per cent above its closing price of S$0.80 on Thursday (Feb 19).

DBS analyst Zheng Feng Chee said in the report earlier on Thursday that Genting Singapore’s “huge net cash position creates meaningful opportunities to unlock shareholder value”.

“Although the upcoming waterfront development will require sizeable capex, our scenario analysis indicates the company has headroom to pay out S$1 billion in cash while maintaining modest debt borrowings.”

The analyst noted that a material capital return plan – be it through equal access offer or special dividend – could excite the market and “act as a catalyst to improve valuations and unlock value for shareholders”.

The bank said that it has pencilled in potentially higher gaming contributions into its forecasts. However, this could be partially offset by softer room profitability, it added.

It noted that basic suite rates for The Laurus – a luxury resort located in Sentosa – have fallen to as low as S$630 per night, from above S$1,000 per night in October 2025.

Downside risks for Genting Singapore include the potential acceleration of market share loss and a lack of defined capital return plans, DBS said. However, these should be “largely cushioned by an attractive dividend yield” of around 5.3 per cent at S$0.75, the bank said.

Potential tailwinds

Amid a “more constructive gaming environment”, DBS has raised its FY2026 forecasted adjusted earnings before interest, taxes, depreciation and amortisation for Genting Singapore by 1 per cent.

However, the bank’s caveat is that this may be partly offset by weaker room rates. “We were initially cautious amid global uncertainties, but Las Vegas Sands’ positive outlook for Marina Bay Sands gives us greater confidence that gaming volume momentum can extend into 2026,” the analyst said.

Moreover, with its most recently renovated assets coming online and strong earnings from Chinese New Year activities, Genting Singapore is currently “well positioned” to defend and potentially expand its market share in Q1 2026, DBS said.

The doubling of China flights ahead of the Chinese New Year travel surge, which the bank thinks could translate into a meaningful uplift in gaming volumes at Resorts World Sentosa, could further support this expansion, it added.