Genting SP

Genting SP: In a latest setback to Japan’s plans to legalise casino gambling, a senior official in Japan’s coalition government, Jeiichi Ishii, told Reuters that it is increasing unlikely that the Japanese parliament will have enough time to pass the legislations via the Diet in the current Autumn session, which ends on 30th Nov ’14. Ishii added that the hurdle for both the lower and upper houses to enact the legislation is quite high, with some members of the Komeito party expressing concerns about the social effects brought about by legalising gambling. Prime Minister Shinzo Abe is pushing for Japan’s first casino to be open by 2020, which coincides with the Tokyo Olympics, yet with two key cabinet ministers recently resigning over claims on the dubious use of public funds, decisions on key policies is expected to face further scrutiny and delays. The latest news could represent a setback for major casino companies, which are eyeing a potential entrant into Japan, with analysts tipping the Japanese gaming market to be potentially worth ~US$15b. Notable casino companies looking to establish its presence in Japan includes Las Vegas Sands, Genting Singapore (GENS), MGM Resorts, Melco Crown etc. Separately, GENS’ share price continues to languish, setting a new four year low at $1.035 in today’s trading. The recent underperformance was attributed to a flurry of earnings downgrade, on grounds that the Singapore gaming industry may see growth being crimped as Chinese visitors have fallen 29% ytd, spurned by the new Tourism Law and recent travel concerns like the disappearance of MH370 and abduction of Chinese tourists in Sabah etc. In a recent interview with Bloomberg, Samsung Asean Equity Fund, which has outperformed 96% of its peers over the last five years, disclosed then that it was still be too early to buy into the stock (price at $1.13 during interview), although the fund would consider buying GENS shares should prices fall to around the $1.00 mark. Going forward, Maybank-KE expects the next few quarters to remain weak, particularly if GENS cuts back on credit to Chinese VIPs, and ends up ceding volume share to Marina Bay Sands. Overall, the street has 13 Buy, 7 Hold and 3 sell rating on GENS with a consensus TP of $1.34.