UOBKayhian on 8 Jan 2014
FY13F PE (x): 18.2
FY14F PE (x): 15.2
Downgrade to HOLD with a lower target price of US$0.45 amid an increasingly
competitive casino gaming landscape in the Philippines and as its Asian cruise
operations embarks on a capacity expansion programme. Our target price applies a 15%
discount to its SOTP valuation, and implies adjusted 2014F EV/EBITDA of 8.6x (taking
into account GENHK’s stakes in Travellers and NCL Corp).
Excitement fizzles in Manila... GENHK’s share price has been sidelined since 45%-
owned Travellers, which operates Resorts World Manila (RWM), was listed on the
Philippines Stock Exchange. Travellers’ share price has since eased about 7% from its
IPO price of P11.28. Travellers’ 2H13 earnings are likely to fall short of 1H13’s run
despite the traditional seasonal strength due to an extended streak of poor luck since
3Q13. We reckon RWM’s market share may ease qoq relative to its sole competitor,
Solaire, in the integrated resort and- casino (IRC) space.
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