Genting SP

GENS: 3Q14 net profit fell 50% y/y to $97.4m, while adjusted EBITDA fell 27% to $277.2m. Revenue fell 17% to $644.8m, as gaming revenue fell 21% to $477.3m due to poor performance in the high roller’s segment due to poor win rate of 2%, partly mitigated by Mass GGR which improved 9%. Non-gaming revenue fell 2% y/y to $167m, but improved 9% q/q, as average daily attractions visitations grew 10% q/q, marking recovery in volumes. Hotel business’ occupancy at 95% with RevPAR of $408. Bad debt provision normalized to 10.9% of VIP GGR. Expect VIP volumes to worsen before it recovers in 2015. Jeju progress intact, expected opening in 1Q15, while Japan IR bill could be passed this session of the Diet, ending 30 Nov. That said, if it misses this session of the Diet, some see the bill being postponed to the Jan-Jun session, with the bill more likely to be passed towards mid-2015 as the earlier part of the session in the year is for more pressing issues. Maybank-KE feels that the tepid outlook is priced in, highlighting low valuations of 8.2x FY14e EV/EBITDA. Latest broker ratings: Maybank-KE maintains Hold with TP of $1.13 Deutsche maintains Buy with TP of $1.32 UOB-KH maintains Buy with TP of $1.32