Thursday, July 25, 2013
Genting SP (GENS): GENS’ 2Q13 results to be announced on 6 Aug evening may show similar strength as MBS (estimated $300-350m vs 1Q13: $250m dragged by a poor 2.1% VIP win rate; 2Q12: $313m). 2Q13 should start seeing recovery in EBITDA margins as Western Zone ramps up. Further, Japan may accelerate approval for gaming liberalisation given the strong mandate for current Prime Minister in the recent upper house election. New gaming bill may be tabled as early as Nov, and it could take another 2 years for legislation to be up including deciding which prefectures to house the integrated resorts, and selection of operators. Thereafter it will take 3-4 years for construction. DBSV see Japan as an attractive US$10b market where GENS can diversify earnings and boost growth. GENS and Las Vegas Sands are front-runners given their strong balance sheets and IR operating track records. DBSV maintain its HOLD rating with TP of $1.42 based on 11x 2014F EV/EBITDA (Macau sector average).