Genting SP

Genting SP: Solid 1Q14 results. Revenue grew 24% y/y to $828.8m, while net profit doubled to $228.5m. Adjusted EBITDA of $400m (+60% y/y) handily beat street estimates of $350m, underpinned by its highest-ever VIP rolling chip volume of $23.2b (+10%) and above average win rate of 3%. This helped offset a decline in mass gross gaming revenue (GGR), as a stronger SGD deterred tourists. Going forward, management has a pipeline of initiatives to drive growth. In 2014, GENS will feature new attractions in the promenade area and in Universal Studios Singapore. Meanwhile its 500-room Jurong Lake hotel development is progressing well, and is slated to open by mid-2015. Regarding its ~US$2.2b integrated resort (IR) JV in South Korea, GENS is finalizing the development plans for the project on Jeju Island and expects to break ground in Jul (targeted soft launch by early 2017). Finally, for Japan, GENS has set up a dedicated project team, and intends to partner a Japanese firm to participate in a proposal to develop a casino resort. Market watchers expect the gaming bill to be debated in the lower house by May, before being passed in the Diet in late Jun or late Sep. Nomura believes the street will view the results as a welcome relief after a few disappointing quarters. Expects stock price to reach positively post the strong 1Q14 results. Maintains Buy with TP $1.59 (from $1.62). Deutsche maintains Buy with TP $1.54. Notes that at 9.2x FY14e EV/EBITDA, valuation is attractive at 1 s.d. below its four year history.