Wednesday, July 27, 2011

Genting SP

Genting SP: Read through from LVS/MBS 2Q11, which reported EBITDA of US$405m, +43% QoQ, significantly higher than consensus driven by +21% QoQ increase in VIP rolling chip, higher win rate (2.99% vs 2.56% last qtr), 12% higher mass revenue, 19% higher slot revenue.

Macquarie retains U/p with TP $1.62 and expect 2Q to have been seasonally higher, driven by June (May/April were largely flat qoq) which benefitted by the school holidays regionally and greater visitation in to Singapore. However, add that for 2H11 to deliver +50% growth in order to achieve market growth of 30% is aggressive and hence the multiples the market is applying to GENS are expensive.

Morgan Stanley retain E/w, and expect GENS to report weaker EBITDA than MBS, yet believe for long-term investors GENS could provide an attractive entry point post 2Q results. Tip GENs to report 2Q11 net revenue of S$814m, -12% qoq and EBITDA of $414 m, -23% qoq.

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