Genting SP

GENS (MBS 2Q14 read-across): Marina Bay Sands (MBS) reported a 17.6% y/y jump in 2Q14 EBITDA to US$417.8m, thanks to a VIP win rate of 3.45% (+92bp), mitigating the 27.3% plunge in VIP volumes to US$10.5b. Meanwhile, the mass market held steady, as slot handle grew 11.7% to US$3.1b, offsetting the 4.9% dip in mass table revenue to US$1.1b. MBS’ hotel business continued to fare well, with occupancy at 99.1% (-0.3 ppt) and average daily room rate rising to US$409 (+7.9%). MBS’ EBITDA margin expanded to 51.9% (+3.8ppt). MBS indicated that it was focusing on the profitability of the VIP business rather than simply pursuing growth through looser credit, which could suggest that Genting SP may extend the trend of capturing higher VIP market share (1Q14: 59%). Maybank-KE indicates based on a normalized VIP win rate of 2.85%, it expects GENS to report 2Q14 EBITDA of $300-350m, or within-expectations. Hence, Maybank-KE maintains Hold on GENS with TP $1.24.