What is the news?

Genting Singapore (GENS) reported net profit attributable to shareholders of S$133.2 million, decreasing 49.9% y-y, but increasing 20.7% q-q. EBITDA of S$332.8 was similarly 14.5% lower y-y, while 18.9% higher q-q. An unchanged dividend of S$0.01 was declared.

How do we view this?

While results were down y-y, 4Q12’s result marked a significant improvement over previous quarter’s more disappointing performance. VIP rolling revenue was a strong positive, registering 56% y-y increase, and achieving near record high levels. Furthermore, growth of VIP volumes was from new customers, positively signaling an expanding base of customers. This quarter also saw the opening of the Marine Life Park. Although contributions are currently low, this is expected to grow as more attractions within the MLP opens, while contributing to the attractiveness of RWS, both as a family entertainment centre, and a gaming venue. We note management’s optimism, particularly on China’s economy, which is expected to contribute positively to GENS. The majority of VIP players continue to be from China.

Investment Actions?

We factor in the strong 4Q12 VIP rolling volume, and management’s optimistic outlook for FY13. We increase our EV/EBITDA multiple from 11X to 13X, reflecting the more positive environment. Based on this, we obtained a new target price of S$1.41, and maintain our “Neutral” rating based on the current share price.

Source: PhillipCapital Research - 22 Feb 2013