What is the news?

Tamerton Pte Ltd, a wholly owned subsidiary of Genting Singapore, won a hotel site at Jurong Town Hall Road with winning bid of S$238.2 mil. The site has a land area of 0.9 ha and a potential gross floor area of about 19 ha.

According to URA, Tamerton’s bid was 16% higher than the second bidder.

How do we view this?

The subsidiary’s bid was excessive relative to other bidders in the same tender as well as against bidders in previous hotel site tenders. GENS must be extremely keen to have the parcel of land. If not, the excessive bid is then a reflection of their unfamiliarity with the business.

Based on our assumptions, we do not expect earnings from the hotel project to be significant. EPS accretive is non-material given the company’s large share base.

Investment Actions?

We maintain our neutral rating with fair valuation of S$1.15, at 11x FY12-13 EV/EBITDA.

Source: PhillipCapital Research - 21 Nov 2012