Genting Singapore (GS): GS share price continues to languish around the S$0.90 region, likely weighted by the lackluster VIP business outlook over the medium term, as well as recent outbreak of MERS. As GS’s EV / EBITDA is now trading at more than 1x SD below its 5-year average, most of the pessimism should already been priced in.
GS warned that VIP volumes are likely to remain sluggish in the medium term, as Chinese high rollers are still affected by the ongoing anti-graft campaign in China. Management is also targeting more on the mass premium market.
While GS is currently building an IR on Jeju Island, it will only be ready by mid-2017; which should give the global health authorities plenty of time to contain the outbreak.
OCBC maintains its HOLD rating with TP: $0.95 and believe GS is a 2017 story with the opening of IR on Jeju Island and building of IRs in Japan.
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