GentingHK: Stock continue uptrend +5% to US$0.44 but off morning high of US$0.465. UKH looking to downgrade to Hold, citing last Fri’s 40% share price jump has largely priced in significantly stronger earnings from 2H10 onwards. But may raise target price closer to US$0.39 from US$0.31 to take into account earnings upgrades. Net earnings in 2011 could reach US$210m vs current forecast of US$181m based on higher daily gross win of US$1.83m & EBITDA margin of 45% at RWM.
The corresponding target 2011 PE and EV/EBITDA multiples are 16.2x and 12.0x respectively. This excludes an 'option value' for its ambition to bid for a casino license in Taiwan should the country legalise the casino industry.
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