• 3Q14 NPAT down 50% YoY
• Near-term outlook remains challenging
• Lower S$1.01 fair value

Muted 3Q14 showing

Genting Singapore (GS) reported a pretty muted set of 3Q14 results last night, with revenue easing 17% YoY and 14% QoQ to S$644.8m, or about 8% below our forecast, as the resort continues to feel the impact of lesser China inbound visitors (gaming revenue fell some 21% YoY and 20% QoQ, non-gaming was relative stable). And due to a lower-than-expected win rate of <2%, adjusted EBITDA came in at S$253.9m (down 27% YoY, also 19% QoQ). As a result, reported NPAT fell 50% YoY and 5% QoQ to S$97.4m, or nearly 18% short of our forecast. Meanwhile, 9M14 revenue gained 3% to S$2224.6m, meeting 69% of our initial FY14 estimate, while reported NPAT eased 5% to S$428.2m, also about 69% of our full-year figure.

Significant challenges for Asian gaming and tourism industry

Going forward, GS believes that there are still significant challenges for the Asian gaming and tourism industry, at least in the very near term; developments in China will continue to have an impact. Nevertheless, GS notes that it is encouraged by the recent positive response by the people and government of Jeju to its Korean project, although did not give any update on the timeline of its IR there. Separately, GS says it remains optimistic about its prospects in Japan though notes that the Casino Promotion Bill is likely to be heard in the Japanese DIET towards end 1H15.

Potential boost from Jurong Hotel from 2H15

Separately, the opening of its 550-room hotel in Jurong by 1H15 would increase its hotel room inventory by some 30%, which could significantly add to its daily visitation figures, both to its casino and other attractions. We understand that plans to refresh its attractions are also under way.

Lower S$1.01 FV

Nevertheless, we opt to pare our FY14 estimates by 6.1-7.3% (FY15 by 2.9-3.3%); this also lowers our DCF-based fair value from S$1.03 to S$1.01. Although we may see a negative knee-jerk reaction in the near-term, we believe value is emerging, hence we maintain our HOLD rating. Potential entry level closer to S$0.90.

Source: OCBC Research - 12 Nov 2014