Genting HK: 1H10 results provide further evidence of a turnaround. Revenue up slightly yoy, but bottom-line swung to net profit of US$11m vs net loss US$35m yoy, due to absence of impairment (US$23m), recovery in associate contribution from NCL Cruise (+US$10m yoy), and higher other income (+US$10m yoy)…
Operating performance was rather mixed. Positive that margins at Star Cruises, NCL improved, as both units continued to benefit from cost cutting efforts, and higher ticket prices; however revenue growth was slower than expected…
Nevertheless, 2H10 has traditionally been a stronger season for Genting HK, hence we could see further improvement in profitability going forward. Catalysts would be further recovery in demand for cruises, and faster than expected breakeven for Resorts World Manila, which saw start up losses of US$17m in 1H10. Stock trades at 25x FY10E PE. UOBKH rated as Buy with US$0.31 target prior to results.
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