Genting SP

Genting SP: JP Morgan downgrade to U/w from Neutral, cuts TP to $1.00 from $1.10. Note of downside risk from earnings multiple de-rating. Remain positive on GENS’ long-term growth potential (duopoly market structure + seasoned management), believe the risk of significant earnings downgrades and multiple contraction will cap share price performance. Political pressure and bad debt risk may drag on RWS topline growth, while intensifying market competition and lower margin contribution from Marine Life Park could dampen overall margin. 2013 EBITDA of S$1.35bn is 15% below street.Couunter currently trading at 26x P/E (120% premium to GENM and 75% to Macau peers), if growth continues to slow with little hope of recovery, think GENS’ earnings multiple may further re-rate significantly. Citi: maintain Neutral, cuts TP to $1.28 from $1.34, result on 12 Nov, likey to fall YoY. Believe the weak volume trends at MBS may not bode well for GENS, lower 2012-14E earnings forecast by ~7% to ~9%, as now forecast RWS to see similar volume trends in 3Q12.