Genting Spore 2Q net profit of $396.5m blew out street estimates and sets RWS as one of the most profitable gaming asset worldwide. The gaming operator reported revenue of $861m and EBITDA of $504m vs full yr consensus estimate of $787m. RWS 2Q daily gaming win averaged $9.2m, which is 8% above 1Q and is significantly higher than Marina Bay Sands $5.5m. This suggests a market share split of 63/37 between RWS and MBS generating an annualized gaming market of US$3.8-4bn.
RWS’s 2Q EBITDA margin of 58% is much higher than 47% in 1Q (adjusted for pre-opening expenses) and ahead of MBS’s 48.5%. While mgmt attributed the robust results to a higher than average hold rate, VIP rollings and mass market drops also rose materially.
At 9.1x FY11 EV/EBITDA, GENS is not expensive relative to gaming peers, which are trading at 10-12x. We believe the stock will see a massive reating following its splendid results. DB raises TP from $1.45 to $1.93; Citigroup upgrade call to Buy from Sell, raising TP to $1.55 from $0.99, Merril up TO to $1.86, Morgan Stanley raise to $1.60, Credit Suisse from $0.90 to $1.68.
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