Genting HK

Genting HK: is up at least 7% since the start of the wk, on a media rpt saying that GENHK and its Philippines partner Alliance Global (AGI) are planning to list their 50-50 JV Travellers’ International, in an IPO that could raise more than US$500m to fund further forays in the Philippine gambling market. The IPO could be launched in 3Q13, according to sources, with proceeds likely funneled into its upcoming Resorts World Bayshore (RWB), a US$1.1b casino resort in Entertainment City Manila (ECM) due to open in 2016. UOBK reckons the news may have been mostly priced into GENHK’s ~38% ytd price rally. While mgt had said it was in no rush to list Travellers, the house reckons a listing, sooner rather than later, would be more positive to GENHK amid upbeat sentiment over the potential size of the Philippine gaming market. The house believes a listing of Travellers would unlock the value of Travellers and also part fund capex to the tune of US$1.1b for RWB (to break ground this quarter, slated for completion 2016), and remaining capex of US$450m at the existing Resorts World Manila (RWM). Nevertheless, UOBK maintains its Hold rating with SOTP-based TP of US$0.41. Chooses to be conservative, in view of rising competition in Manila amid significant capital outlays, and subdued growth in the Hong Kong cruise gaming market. Notes Philippine gaming peer, Bloomberry has seen is share price slide 24% to P12.66 since peaking at P16.58 in early-Mar. Tips August to be a critical month, as Bloomberry's 2Q13 results would be revealed with a full quarter's contribution from the Solaire integrated resort. In a blue sky scenario, UOBK tips an optimistic valuation of GENHK at US$0.59.