Genting Singapore

UOBKayhian on 10 Feb 2014

FY13F PE (x): 28.1
FY14F PE (x): 22.4
Formed JV to build an integrated resort in Jeju Island. Last Friday, Genting Singapore (GENS) announced it has teamed up with Landing International Development Ltd (LIDL) to jointly develop an intergrated resort in Jeju Island, South Korea. Mega resort with gaming facilities. The US$2.2b (S$2.8b) resort will be Jeju Island’s largest tourism destination to-date, to be built on a 2.3m sqm site (568 acres). The mega resort will feature three luxury hotels (2,800 rooms), shopping mall, theme park, villas and apartments, as well as gaming and other entertainment facilities. According to LIDC’s chairman, the gaming facility will house up to 800 gaming tables, of which 200 tables will
be catered to high rollers. Construction of the resort will begin in Jun 14, with progressive opening expected in 2017.

Maintain HOLD and target price of S$1.42, based on 12x 2014F EBITDA. Although the Jeju project may boost GENS’s earnings by 12%, the major game changer for GENS would be its ultimate success in Japan as we anticipate Japan’s gaming market to be as huge as US$10b, making it the second-largest gaming destination in the world. Meanwhile, we caution GENS’s share price may see short-term weakness in reaction to the 20% sell-off across Macau gaming stocks recently. Entry price is S$1.30.