Genting SP

Genting SP / LVS results: UOB Kay Hian has a read through in LVS results. House note that MBS’ RCV jumped impressively, but GGR and EBITDA remain depressed. LVS 4Q12 report card revealed that MBS rolling chip volume (RCV) rebounded sharply in 4Q12, recording a growth of 45% yoy and 37% qoq to S$20.1b. However, VIP GGR recorded a 7% yoy contraction to $430.9m as the RCV win was lower at 2.14% (4Q11: 3.34%, 3Q12: 1.79%). Meanwhile its non-rolling chip vol continued to languish both on a yoy and qoq basis by 3.9% and 8.1% respectively to $1.36b despite the higher win rate at 24.20%. Overall, MBS delivered an estimated adjusted EBITDA of $369.9m (+13.7% qoq, -32.7% yoy) while gaming EBITDA is estimated to be $349.4m for the qtr. On a notional hold-adjusted basis, 4Q12 EBITDA would have been up 6.9% yoy to US$406.4m (about $499m). UOB Kay Hian highlights mixed implications for Genting SP. Note that while MBS' 4Q12 results suggests that GENS would also enjoy a relatively robust RCV for the same quarter, the quantum of recovery may not be as robust at GENS given MBS' low win percentage (a low win percentage could have allowed players to extend their play, which raises RVC). More importantly, MBS' figures point to a contracting mass market vol (noting that historically 4Q vol should have risen qoq instead of contracting in 4Q12), as local patronage continues to reel from tight rule enforcement by the Singapore government. Still potential downside risk to GENS' 2013 EBITDA. Despite the surge in RCV and 4Q being a seasonally strong qtr, MBS delivered a property EBITDA of only $369.9m in 4Q12, -33% yoy. The falloff in mass GGR accounts for a significant portion of the earnings contraction, as the mass market segment commands a much higher margins than the VIP segment. While house reckon that the worst is over for GENS since posting an adjusted EBITDA of S$303m, its earnings recovery momentum may still be sluggish even after the opening of its Marine Life Park due to the contracting mass market segment. Hence, there could be downside to the 2013 consensus EBITDA forecast of S$1.45b. UOB Kay Hian maintains SELL on GENS with a $1.10 based on a 10x EV/EBITDA target.