UOBKayhian on 5 Nov 2013
(GENS SP/HOLD/S$1.52/Target: S$1.42)
FY13F PE (x): 30.6
FY14F PE (x): 24.4
Adjusted EBITDA within our expectations. 9M13 EBITDA of S$907.9m contributed 73% of our full-year forecast, in line with our expectations, as we expect a stronger 4Q due to seasonality factor.
Improvement in win percentage. GENS's win percentage improved to slightly above the theoretical win percentage of 2.85% in 3Q13 (2Q13: 2.5%, 1Q13: 2.1%), contributing largely to the upswing in EBITDA margin to 44.7% from 43.9% in 2Q13. However, the margin gains were slightly offset by lower contribution from the lucrative mass-market.
Maintain HOLD and target price of S$1.42, based on 12x 2014F EV/EBITDA. We think GENS is fairly valued with share price having rallied 18% from its Aug13 low as investors gradually priced in an ‘option value’ for potential greenfield and M&A opportunities. Entry price is S$1.30.
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