Genting Spore: Daiwa initiates with Outperform call & $2.06 target price based on 15X 2011 EV/EBITDA. Highlights Spore’s position as convention & tourism hub provides strong platform & supportive infrastructure for Resorts World Sentosa. Tips revenue & EBITDA CAGR of 25% & 32% to $4.3bn, $2bn over 2010-2012. Adds that RWS has unique proposition in region by combining gaming & a world-class theme park.
With Universal Studios Sore on one side, RWS can leverage on Genting Group's expertise and customer database in gaming and resort operation. Shares still on a sharp ascent although momentum indicators are overbought.
CLSA lifts Genting Spore target price to $3.00 from $2.00 after raising valuation multiple to 17X 2011 EV/EBITDA from 13X to factor in better earnings visibility. Tips EBITDA CAGR of 18% over 2011-2015; highlights industry revenue growth will remain very high as the integrated resorts are yet to ramp up. Adds company is on track to generate high free cash flow, aided by strong gaming demand from both tourists as well as locals as the gaming experience become a new entertainment option.
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