Genting Singapore’s (GS) share price tumbled 7.2% this morning to S$0.835 (just off early S$0.80 low), after issuing a profit guidance last night.
In it, GS warned that it expects to see significantly lower NPAT for 2Q15, mainly due to fair value loss on derivative financial instruments (as a result of unfavourable market conditions) and also unrealized forex translation losses.
But GS believes that its adjusted EBITDA for the quarter should be comparable to 1Q15.
Recall that it posted an Adjusted EBITDA of S$228.1m in 1Q15, with a margin of 35.8%.
Note that GS is still in the process of finalizing its 2Q15 accounts and guidance is based on preliminary assessment by the board.
If the decline is due to non-cash, non-recurring losses, we do not believe that it should affect its core earnings much.
We currently have a HOLD rating on the stock with a DCF-based fair value of S$0.95.
Source : OCBC Investment Research