Genting Singapore

UOBKayhian on 6 May 2014

FY14F PE (x): 26.2
FY15F PE (x): 25.0

Impressive EBITDA... Genting Singapore (GENS) reported 1Q14 revenue of S$828.8m
(+19.6% qoq, +23.8% yoy) and EBITDA of S$400.3m (+59.9% qoq, +60.3% yoy). The
solid EBITDA exceeded expectations, accounting for 32% and 28% of our and
consensus’ full-year forecasts respectively. Pleasantly surprised with strong RCV and
hold rate. 1Q14 rolling chip volume (RCV) of S$23.3b (+22% qoq, +12% yoy) caught
us by surprise, its highest since 4Q10. As a result, GENS retained its VIP market
leadership with a 59% share. While management did not reveal the reasons behind the
surge in RCV, we reckon this was attributable to both a widening breadth of new VIP
players (particularly from Southeast Asia) and seasonality strength. In addition to
stronger volume, GENS’s hold rate (3%) also improved markedly from a subdued 2.5%
in 2013.
Upgrade to HOLD with a higher SOTP-based target price of S$1.32 (from S$1.27),
reflecting the stock’s 10% price underperformance vs the market since our downgrade
in Feb 14. On top of 12x 2014F EBITDA, we have also imputed a ‘Japan option value’
of 10 cents into our target price, based on a 30% success rate.