Friday, April 8, 2011

Genting Singapore BUY Target Price $2.30 by UBS

UBS upgrades Genting Singapore (G13.SG) to Buy from Neutral, noting the counter has underperformed the weighted performance of the 5 listed Macau operators by around 25% and the STI by around 7.0% YTD.

“We think Genting Singapore is turning into a bona-fide China (wealth creation) play, with strong growth in VIP from North Asia (especially China) expected to continue into 2011-2012E.”

It tips VIP volumes of US$18 billion ($22.8 billion)-US$20 billion per quarter at RWS in 2011 (putting RWS in the same league as the top-performing Macau properties). It expects HK/China to account for as much as 50% of RWS' total gross gaming revenue by 2012, when its VIP-targeted expansion will be rolled out.

Overall, the house says China VIP growth, capacity expansion in 2012, a net cash position and potential for new projects together make Genting an attractive stock at this valuation. It lowers its target to $2.30 from $2.39, based on 15X 2011E EV/EBITDA (vs 16X previously).

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