Genting SP

Genting SP: CS maintaining its OUTPERFORM Call on Genting, in anticipation of a stronger 2H13. Note that Japan is a potential wildcard, management is optimistic on a first step in casino gaming legislation by year end. The market is sceptical about Japan but should there be progress on gaming legislation, believe GENS’ stock price could benefit. GENS’ track record in Singapore and its strong balance sheet put it in a good position to compete in new markets, in house view. The Singapore VIP gaming segment has seen a strong rebound in volumes YTD 2013 (+34% YoY). Unfortunately, the 1H13 win rate was exceptionally weak. House expect the VIP win rate to normalise in 2H13 and drive a meaningful half-on-half recovery in EBITDA. Historical average EV/EBITDA valuations suggest 26% potential upside to GENS’ stock price. GENS is also trading at a 25% discount to the FY14E Macau average EV/EBITDA of 13x.