Genting Singapore Plc, Southeast Asia’s biggest casino operator by market value, fell the most since May after posting earnings that missed analyst estimates.
Genting dropped as much as 4.6 percent to S$1.335, the biggest intraday drop in nine months, before closing at S$1.36 in Singapore. The shares have fallen 9 percent this year, the biggest decliner on the benchmark Straits Times Index. The company reported yesterday that fourth-quarter net income increased 5 percent to S$140.3 million ($110.9 million), missing the S$159 million average of three analyst estimates compiled by Bloomberg, as gaming revenue declined.
“We downgrade to sell to reflect sluggish gross gaming revenue trends in 2014,” Vincent Khoo, an analyst at UOB-Kay Hian Holdings Ltd. in Singapore, wrote in a note today. The brokerage cut its share-price forecast to S$1.27 from S$1.42.
Earnings this year will be curbed by labor market conditions in Singapore, Genting said yesterday. Prime Minister Lee Hsien Loong is pushing companies to produce more with fewer employees as the island confronts an aging population and voter discontent about foreign workers. Policies ranging from higher levies for overseas labor to tighter limits on non-Singaporeans in some industries have boosted costs for companies.
“Our net income will be challenged by the tight labor market, coupled with rising costs,” Genting said in a statement. “Whilst we are working on improving productivity in some of our business segments, the labor-intensive nature of our business only allows for limited gains from any productivity measures that we undertake.”
“Singapore gross gaming revenue growth prospects will likely remain unexciting,” Citigroup Inc. analyst George Choi wrote in a note. Genting’s profit missed estimates because high-stakes gambling increased less than expected while mass market revenue fell, according to the brokerage, which lowered its share-price target to S$1.75 from S$1.88.