Genting HK

Genting HK: Macquarie upgraded counter to OUTPERFORM (from Neutral) and TP of US$0.47, citing that it is a proxy to Norwegian Cruise Lines (NCL) (70% of GENHK’s profits and 50% of its valuation comes from NCL) and investors seem to have forgotten that. With NCL stock price up 50% over the last 3 months and GENHK’s flat, the disparity has opened up a significant valuation gap. GENHK’s 25.4% stake in NCL alone is worth close to GENHK’s total market cap now, which is why Macquarie there is a significant value trade that should not be ignored. This means that GENHK’s stake in RWM, Echo Australia and Star Cruise are all coming for free: GENHK has a 45% stake in RWM (RWM PM, PHP7.72, Not rated), 6.6% stake in Echo (EGP AU, A$3.77, Not rated), and 100% in Star Cruise. These 3 stakes imply an equity value of US$2b (US$0.25/share) for GENHK.