Investors should brace for a wild ride as Genting Singapore share price looks set to come under severe pressure due to a series of unforeseen events. In early April 2019, the government of Singapore announced higher casino tax by 2022 and 50% increase in casino entry levies for Singaporeans and PRs effective 4 April 2019. Prior to this, Genting Singapore share price also come under heavy shelling due to sell-offs by major fund houses.
The impact of the tax hike cannot be underestimated. In late 2018, the Malaysia government implemented similar tax hike, causing Genting Berhad share price to tumble to a ten-year low. Although the Singapore casino tax hike will be implemented in three year time, the move will cast a dark shadow on Genting Singapore’s growth outlook and affect confidence in Genting Singapore share price. And confidence means everything in the stock market.
As the saying goes, it never rains but pours. This is certainly the case for Genting Singapore as it shot itself in the foot by announcing a disappointing Q1FY2019 that saw revenue dropping 5% to $640 million and net profit declining 5% to $205 million. Against this backdrop, Genting Singapore share price went on bombshell meltdown, correcting from $1.07 in April to the current $0.88 level.
Is this a good time to enter this counter and buy Genting Singapore share? It really depends who you choose to believe. On one hand, stock analysts like DBS Bank had been mightily bullish and set a target price of $1.20 for Genting Singapore share price. On the other hand, big boys had been selling off this counter since February. Should investors throw in the towel or hang on for their dear lives?
Genting Singapore share price slipped
Indeed, it is bizarre that analysts chose to talk up the recently announced expansion plans for Genting Singapore non-gaming facilities. Under the plan, two new hotels will add up to 1,100 more rooms to Resort World Sentosa (RWS). Universal Studios Singapore will build two new attractions – Minion Park and Super Nintendo World. The S.E.A Aquarium will also be enlarged. Access to Sentosa will be enhanced with the introduction of a driverless transport system across the Sentosa Boardwalk. These enhancements require massive capital expenditure and the return on investment is also uncertain because there may be possibility that the attractions may not live up to their hypes.
The timing of the expansion plan is also bad for Genting Singapore as it is gearing up for its bid to penetrate the Japan’s casino market. Of course, there is no guarantee that Genting Singapore will win the Japan bid. But the Singapore’s IR expansion plan is an unwelcome distraction for Genting Singapore, which will want to diversify its revenue source through penetration of the Japanese market.
For sure, the above initiatives will help to increase traffic to RWS and bolster the revenue for its non-gaming segment, especially the takings from the hotel rooms. However, make no mistake about it. Genting Singapore main revenue driver has always [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]
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