Genting SP

Genting SP: weak 3Q12 results, most analysts saying below to inline with their expectations. Revenue was $670.2m, -16% yoy, - 5% qoq, below consensus view. EBITDA was $303.9m, -19% yoy, -3% qoq, above consensus view. Underlying gaming trend remained soft with VIP rolling volume -3% qoq, -19% yoy, with a win rate of 2.8% (vs 3.1% in 2Q12); mass dropped 3% qoq. Nomura estimates total Spore gaming industry revenue was $1.5b for 3Q12, -8% qoq, -22% yoy. YTD, estimates Spore gaming revenue at $5.2b, -6% yoy. Market share stood at 51% for rolling chip volume, 47% for mass market. GENS reported blended EBITDA margins at 45% in 3Q12, flat qoq, although it guides to remain under pressure for the next two quarters, given higher pre-opening operating expenses and capacity building expenses at marine Life Park, whose soft launch is expected in Dec ’12. The co expects margins to improve only from 2Q13 onwards. Mgt acknowledged that local Singaporean visitors to the casino have gone down while visitors from Malaysia and Indonesia have marginally improved in 3Q12. However, given the strict Singapore laws on gambling, it expects the local market to suffer a bit in future and plans to focus on tourists from outside Singapore. Nomura keeps at Reduce with TP $1.23. Expects weak share price reaction post results given the decline in overall volumes and revenue. HSBC keeps at Underweight, cuts TP to $1.11 from $1.30, cites weaker market and stricter local regulations. Deutsche keeps at Hold with TP $1.21. Credit Suisse maintains Outperform with TP $1.80, says the stock is a potential beneficiary if mkt risk appetite returns.