Genting SP

Genting SP: 2Q13 results missed estimates, again on poor luck factor, despite stronger underlying VIP volume growth. Nevertheless, following the recent stock price correction and lack of immediate catalysts, some market watchers expect a neutral stock reaction. Adjusted EBITDA was $310.8m (+1% y/y, +24% q/q), again negatively affected by below theoretical VIP hold of 2.5% (vs 2.12% in 1Q and 3.1% in 2Q13), despite a significant increase in VIP rolling chip volume (+29% y/y). Net profit edged up 1% y/y to $140.2m, as revenue inched up similarly to $707.9m. Overall, the Singapore gaming market rose an estimated 8% y/y in 2Q, or 2% y/y in 1H to $3.85b, underpinned mainly by a stronger VIP market. Barring further exceptional weakness in VIP win rate, some market watchers expect a stronger 2H13, though quarterly VIP volumes should remain volatile. GENS remains optimistic that Japan is closer to legalizing casino gaming via a two stage approval process, i.e., approval of a casino enabling bill before end 2013 and approval of a detailed implementation bill a year there after. If Japan goes ahead with casino gaming, GENS's track record in Singapore and its strong balance sheet would put it in a good position to compete. GENS is also exploring other Asian leisure/gaming opportunities which it hopes to conclude in 6-12 months. Maybank KE maintains Hold with lower TP of $1.34 (from $1.70) Deutsche maintains Hold with TP $1.38. Credit Suisse maintains Outperform with TP $1.80. Nomura maintains Reduce with TP $1.23.