Genting SP

Genting SP: Deutsche maintains Hold with $1.36 TP. House note that Genting SP is due to release 2Q results on Aug 10. Forecast VIP rolling down 8% yoy / -2% qoq; mass revenue up 3-4% yoy and qoq. Assuming normal hold, expect 2Q EBITDA of $354m (+3.9% yoy / -4% qoq). RWS was unlucky in 2QFY11 with 2.66% hold. Bad debt provision should stay high Expect bad debt provision to remain high, and do not expect a big spike in 2Q as GENS hiked bad debt provision in 1Q and has set aside higher reserve at end 2011 relative to MBS. At end June, MBS provided 23% of its receivables (US$822m). Street forecast is too high, as house highlighted in recent note (“No fresh catalysts; cutting earnings estimates and target price,” 25 July 2012), see significant downside risk to Street forecasts. FY2012-14 EBITDA forecasts are 13.4%, 12.7% and 11.4% below Street.