Genting HK: CIMB maintains Outperform with higher TP US$0.51 up from US$0.48. Catalysts are expected from Resort World Manila (RWM), better-than-expected NCL and Star Cruises performances and opportunities to enter other jurisdictions.
House is cautiously positive on US cruise industry but both Philippine and Star Cruise businesses show prospects. NCL posted a net profit of US$29m in 2Q11 turning from US$15m loss yoy and EBITDA margins expanded despite a 17% yoy rise in fuel prices with operational improvements in almost all areas. However, headwinds are possible esp if the US economy slumps.
Phillipine gaming mkt is still in early growth stage despite operations over 30 yrs and gaming rev grew 1% after RWM was launched, highlighting a supply driven model. RWM has first-mover adv in integrated-resort space and should allow it to create customer stickiness. Travellers is also the only experienced co among the other licensees in Manila Bay which should give RWM an edge operationally.
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