Genting Singapore

Genting Singapore: Maybank-KE thinks 2H14 VIP volumes are likely to fall markedly y/y, in light tight credit conditions in China. However, volumes should recover in 2015 as the Chinese government has begun to ease credit conditions. Meanwhile, the continuous slide in Singapore’s property prices could hurt mass-market gross gaming revenue in the next two years. As a result, Maybank-KE cuts FY14-16e EBITDA forecast by 1%/13%/16% which leads to 2%/22%/26% reduction in earnings, due to negative operating leverage from depreciation and perpetual securities distribution. On the Japan Integrated Resort legalization front, the promotion bill is highly expected to be passed in the Diet session between 28 Sep – 30 Nov. Meanwhile, South Korea could open up more casinos if Japan liberalizes its casino industry. Its 50% owned Resorts World Jeju is currently awaiting construction permits. Following above mentioned EBITDA trims, Maybank-KE cuts TP for GENS to $1.13 from $1.24, but maintains its Hold rating. *Blue sky timeline to Japan’s first casino: Nov’14 – Promotion Bill passed Mid- 2015 – Implementation Bill passed (where regulatory framework,cities to host casinos are decided) Mid -2016 – Selecting winning cities to host casinos 2020 – Assuming 4 years construction time, this Japanese casinos may open just in time for the 2020 Tokyo Olympics.