Genting

1Q10 results of Genting Singapore masks strong underlying performance. Net loss of $396.3m was attributable to an impairment loss of $478.1m relating to its UK casino operations. Stripping this out, the group would have recorded a net profit of $81.8m comprising IR (RWS) EBITDA of $109m, which included $70m in pre-operating expenses and $16.7m from its UK operations. Core RWS EBITDA came in at $179m, which is ahead of $600-700m consensus estimates for FY10 and yielding core margins of over 50%.

Revenue for 1Q10 more than quadrupled to $460m from $105.4m a year earlier. The big boost in revenue came from RWS and better 'luck factor' from its UK casino operations. RWS reported revenue of $335m, of which gaming comprised 85%. This implies gaming revenue per day of >$6m, which higher than market estimates. This is a very good start for Genting Spore and the key upside risks would include a speedier ramp up of its gaming tables and higher occupancies at its hotels (currently at 50%).

Genting Spore +1.5¢ to $0.99 as investors look beyond gaming group's headline 1Q10 $396m loss to Resorts World Sentosa's growth potential. UBS, which has Neutral call with $0.99 TP believes $478.1m impairment charge for UK operations not relevant to Genting's fundamental valuation as impairment just reflects company's initial over-payment for its UK acquisitions. JPM has $1.35 TP, Cimb $1.38, DBSV $1.20. Only Citi has sell call with $0.65 TP.


Watch the $0.975 level; will need a sustained move above $0.975 to take the stock higher