Genting SP

Genting SP: Deutsche cuts TP by 18% to $1.36, maintains Hold rating. Notes the stock is the second worst performing gaming stock YTD in its coverage. Sees earnings risk still to the downside, given the weak regional macro trend and recent downgrade in Spore GDP. Expects GENS 2012 VIP revenue growth to be negative, while operating costs to stay high on a higher VIP commission rate, promotional/ rebates and bad debt provisions. Cuts GENS FY12-14e net profit by 14-17%. Notes GENS valuations is at a premium to Macau peers (9.2x FY12e EV/EBITDA), despite Spore’s lower growth profile. Adds, an unclear invmt strategy in Echo Entertainment and a tightening regulatory environment in Spore may further cap near term performance. GENS to report 2Q12 results on 10 Aug.