Singapore companies’ report cards show where the growth is

Analysts Vincent Khoo and Jack Goh say prospects for Genting Singapore are looking good for the year ahead.

Kang Wan Chern

Kang Wan Chern

The Straits Times


Genting Singapore, which runs Resorts World Sentosa, is among the firms that saw its earnings bounce back in 2022. PHOTO: ST FILE

February 27, 2023

SINGAPORE – Most companies listed in Singapore have recently announced financial results and their report cards reveal brighter prospects for firms in some sectors for the year ahead.

Some companies with exposure to tourism, for instance, have benefited from the resumption of international travel after nearly three years of Covid-19 lockdowns, and analysts expect their earnings to grow now that China has reopened its borders.

Genting Singapore, which runs Resorts World Sentosa (RWS), is among the firms that saw its earnings bounce back in 2022 with travellers returning to Singapore.

On Feb 21, the firm said that revenue for the year ended Dec 31, 2022, amounted to $1.73 billion, which is up by more than 60 per cent over the previous year, while earnings totalled $340 million, up by 85 per cent over the same period.

Company officials said revenue, which comprises gaming revenue and those of other operations like its hotels and Universal Studios Singapore (USS) theme park, grew more strongly in the second half of FY2022, reflecting continued improvement in the number of gamblers and travellers to Singapore.

Analysts Vincent Khoo and Jack Goh from brokerage UOB Kay Hian say Genting Singapore’s prospects are looking good for the year ahead.

Contributions from returning Chinese visitors should be reflected in the company’s earnings from the first quarter of this year, while the May reopening of Festive Hotel, one of the hotels at RWS, will add revenue from an additional 389 rooms to its top line.

Over the longer term, Genting Singapore has also committed to spending $4.5 billion over five years to improve the attractions at RWS, such as Minion Land in USS.

This could all lead to better share price value and boost dividends, which Genting Singapore may now start paying more regularly after plans to build an integrated resort in Japan were cancelled in 2021, the analysts said.

The company recently declared a final FY2022 dividend of 2 cents, taking total payouts for the year to three cents, representing a 3 per cent yield. Its shares closed at $1.02 apiece on Friday, up 3.3 per cent in the past month and by more than 32 per cent over the past year.

Another company expected to receive a boost from China is Wilmar International.

While the agribusiness group on Feb 21 reported a bumper set of FY2022 results and its highest dividend payout since listing on the Singapore Exchange in 2016, company officials said palm oil prices, which helped Wilmar post some US$2.4 billion (S$3.2 billion) in FY2022 earnings, should be more subdued this year.

However, analysts at UOB Kay Hian and OCBC Research reckon the volatility should be offset by stronger spending by consumers in China, where Wilmar’s food products business is based, and are bullish over the firm’s potential to deliver more value this year.

Wilmar also said that business is expected to proceed as usual for Adani Wilmar, its India-listed packaged food joint venture with Adani Group, which has lost billions in market value after coming under attack by short sellers in January.

In a show of confidence, Wilmar chairman and chief executive Kuok Khoon Hong last week increased his deemed interest in the company, buying 535,000 shares at an average price of $3.95 per share, or a total of more than $1.9 million, bourse filings showed.

Mr Kuok maintains a 13.13 per cent total interest in Wilmar, which closed on Friday at $3.93. The stock is down by more than 4 per cent in the past year.

Meanwhile, a handful of mergers and acquisitions have taken place in Singapore that could lead to potential growth opportunities for the firms involved.

One example is in-flight and cargo services firm Sats’ $1.82 billion acquisition of Worldwide Flight Services (WFS). The move is expected to be completed in April, following a rights issue to raise $798.8 million to partially fund the acquisition, which was announced on Feb 22.

Post acquisition, analysts Tay Wee Kuang and Lim Siew Khee of brokerage CGS-CIMB expect Sats’ revenue to exceed $5 billion in FY2024, up 151 per cent year on year, and earnings to hit $111.4 million from an expected loss in FY2023, with WFS contributing $3 billion to revenue and $4 million to earnings.

In the short term, Mr Tay and Ms Lim see Sats’ share price falling from its current level of $2.82 per share to $2.62. This is the theoretical market price of each Sats share assuming the completion of the rights issue. The shares will trade ex-rights on March 1.

Analysts have thus cut their 12-month target valuation for the stock to $3.10 from $3.21 before, based on a larger-than-expected rights issuance, which is dilutive to shareholders, and a lower subscription price of $2.20.

Earnings for firms in the technology sector are projected to be more volatile this year. PHOTO: REUTERS

Earnings for firms in the technology sector are projected to be more volatile this year.

Despite announcing record high revenues in FY2022, AEM Holdings, which provides semiconductor and electronics test solutions, warned on Friday that “a confluence of factors such as a global slowdown and rising interest rates that adversely impact capital expenditure are leading to a weak 2023”.

The company is expecting revenue of $500 million for FY2023 compared with $870.5 million in FY2022. Earnings in FY2022 amounted to $126.8 million.

Shares of AEM closed on Friday at $3.38, before its results were announced. The shares were down 2 per cent in the past month and more than 18 per cent in the past year.

Nanofilm Technologies, which uses nanotechnology to design products for industrial purposes, has also struggled due to higher costs incurred by its China factory, as well as inflationary pressures and rising interest rates.

For the full year ended Dec 31, 2022, net profit was down 29.6 per cent to $43.8 million, while revenue dipped 3.8 per cent in the same period to $237.4 million.

Nanofilm had said the decrease in net profit in FY2022 was due in part to one-off costs of around $2.5 million related to Covid-19 restrictions and a net loss of around $1.6 million incurred by a subsidiary.

However, UOB Kay Hian analyst John Cheong expects China’s recovery and Nanofilm’s operations there to gradually pick up in the second half of this year.

Chief executive Gary Ho also noted Nanofilm is focused on achieving its targets of $500 million in revenue and $100 million in earnings by 2025.

Shares of Nanofilm closed on Friday at $1.50, up 2.7 per cent in the past month, but down by more than 46 per cent in a year.

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