Genting SP

Genting SP: 4Q12 EBITDA inline to above consensus estimates. Adjusted EBITDA was $369m, -6% yoy, +22% qoq, above Bloomberg consensus of $321m. Gaming revenues surged 19% qoq in 4Q12 to $627m, though it was down 3% yoy. Like its peer MBS, VIP gaming volume bounced back to 56% higher yoy and 42% qoq, while mass gaming revenue held firm at +2 to +4% qoq and yoy. In 2012, the Singapore gaming market fell 5% yoy to $7.3b on lower VIP hold. RWS and MBS ended 2012 with roughly equal GGR market share. EBITDA margins remained around 45%, flat qoq, and are expected to remain under pressure for the next two quarters as well, as per mgt, given higher pre-opening operating expenses and capacity building expenses at Marine Life Park. The co expects margins to improve only from 2H13 onwards. Nevertheless, mgt notes, "the global economic outlook appears more positive this year and we are cautiously optimistic of the performance of RWS”. Over the longer term, GENS plans to open its Jurong hotel in 2H15, adding 500 room keys or 33% to its hotel space. Strategically located near the second link, this hotel is likely to cater to foreign mass players and will be built at a cost of $378m (including land cost). Nomura expects a neutral to positive price performance post 4Q12 results. But keeps Reduce rating and TP $1.23, notes the volatile nature of the VIP business does not guarantee a stronger subsequent quarter. Deutsche notes GENS share px and valn may stay elevated in the short term. But at 11.8x EV/EBITDA and 26.4x FY13e P/E, notes GENS valn is less attractive relative to history (11x) and Macau peers (12x). Maintains Hold on a higher TP of $1.40 (from $1.27) as downside risks diminish. CIMB maintains at Underperform with TP $1.20, views results cautiously on view that growth has been fueled by credit rather than a sustainable growth in the business. At end 2012, GENS has $956m in receivables outstanding and has written off $264m since the start of operations. Credit Suisse however maintains at Outperform with TP $1.80, remains optimistic on the prospects of an earnings recovery in 2013. Notes, while the mkt remains skeptical, GENS expects potential casino legislation in Japan within the next 12 mths, which could open up a new growth mkt.