Genting Singapore

UOBKayhian on 25 Feb 2015

FY15F PE (x): 16.2
FY16F PE (x): 15.3

Hold-normalised 2014 EBITDA in line. Genting Singapore’s (GENS) 2014 flattish EBITDA of S$1,158m accounted for only 88% of our full-year forecast, largely due to disappointing 4Q14 win rate of 2.2%. However, on a hold-normalised basis (2.85% win rate), EBITDA would have been in line at S$1,350m. 4Q14’s results were commendable after considering the higher-than-expected receivables impairment and 15% fall in RCV. 2015 EBITDA to recover significantly as win percentage should normalise. We foresee modest top-line recovery in 2015, as the expected mid-single digit growth in mass market volumes and normalisation of win percentage should more than offset contracting VIP volumes. Maintain BUY with unchanged SOTP-based target price of S$1.32, implying 12x 2015F EBITDA. Currently at 9x 2015F EV/EBITDA, GENS is trading at the low end of its historical range. In view of the 10% share price correction in the past two months coupled with disappearance of valuation premium against Genting sister companies, we believe most of the negatives stemming from VIP segment have been priced in.