GENS

GENS: Posted disappointing 4Q14 results. Net profit fell 36% to $89.2m, while adjusted EBITDA decreased by 24% to $190.2m. Assuming theoretical normalized win rate, adjusted EBITDA would have been $280m.

Revenue dropped 8% to $637.9m, driven by a 9% drop in gaming revenue to $461.3m as growth in mass and premium mass was more than offset by significantly below average win percentage (2.2%, 4Q13: 2.5%) and rolling volume ($15.3b, -15% q/q, -23% y/y). Overall market share was 42% (3Q14: 49%).

Non-gaming revenue fell 4% to$176.1m. Hotel occupancy was 93% with RevPAR of $422.

Record bad debt provision of $82m weighed on bottom line. One-offs incurred were a loss on derivatives of $146m, a gain of asset sale of $153m and a net exchange gain of $75m.

Management guides a soft VIP market in 2015, citing challenging collection conditions and tighter credit policy.
The focus will instead shift to mass and premium mass, especially with the opening of 550 rooms Jurong hotel by May 2015. Nevertheless, it could take some time for visitors from the region to flock in.

Management also cited a possibility of increased dividend payout to pare down cash, if the Japan gaming-bill is not tabled by June.

On the Jeju front, a new bill to raise the quality of casinos in Jeju will soon be presented to the Jeju Provincial Assembly. If passed as an act, conditions for gaming licenses, junkets and number of tables in casinos/ integrated resorts would be stipulated. Management is confident in securing the gaming license.

Meanwhile, share buybacks will provide share price support.

Final DPS of 1¢ maintained.

Genting Singapore is currently trading at 8.5x FY15e EV/EBITDA.

Latest broker ratings:
Macquarie maintains Underperform with TP of $0.95
JP Morgan maintains Underweight with TP decreased to $0.95 from $1.00
OCBC maintains Hold with TP increased to $1.03 from $1.01
Maybank-KE maintains Hold with TP cut to $1.08 from $1.13
CIMB maintains Add with TP reduced to $1.20 from $1.22
UBS maintains Buy with TP of $1.30
Deutsche maintains Buy with TP of $1.32
Credit Suisse maintains Overweight with TP reduced to $1.40 from $1.55
Goldman Sachs maintains Buy with TP of $1.42
Nomura maintains Buy with TP of $1.52