• Near-term positives in sight
• Still 2017 story for now
• Strong overseas angle

Near-10% tumble after 1Q results

Genting Singapore (GS) saw a near-10% tumble in its share price to hit S$0.92 (recent 52-week low is at S$0.905), after the integrated resort operator reported a weaker-than-expected set of 1Q15 results on 14 May. We had also cut our rating from Hold to Sell as its core NPAT of S$61.3m (down 70% YoY) only met 13% of our full-year estimate then.

Accounting for most of bad news

But at current levels, we note most of bad news may have already been priced in. For one, GS has already warned for some time 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. It had also warned of further credit tightening for its VIP business and more provisions may be needed as collection of debt from these players are more difficult and could remain challenging to do so.

Some positives in the near-term

Meanwhile, we do see some near-term positives on the horizon. Universal Studios Singapore (USS) will re-open its main attraction – the Battlestar Galactica ride on 28 May, just in time for the Jun school holidays; this after being closed for nearly two years. In addition, media reports suggest that occupancy rate at its newlyopened Genting Hotel Jurong has been better than expected, even though it has just opened 25% of its 557 rooms in Apr. When fully opened in Jun, GS is hopeful that it can attract as much as 1.5k additional daily visitors to its IR this year.

Really a 2017 story

Having said that, we believe the GS is really a 2017 story and one with a strong overseas angle. The first being the opening of its integrated resort on Jeju Island, South Korea and the second – still a long shot – will be the building of IRs in Japan. For these reasons as well as on valuation grounds, we upgrade our call to HOLD with an unchanged fair value of S$0.95.

Source: OCBC Research - 27 May 2015