• Maintain NEUTRAL with an unchanged Target Price of SGD0.97, 9% upside and 4% dividend yield. See Genting Singapore share price.
• As a result of the ongoing protests in Hong Kong, in 2H19, Genting Singapore (SGX:G13) could benefit from increased tourism activities. Higher tourist arrivals could help boost the mass-gaming and non-gaming revenues which could offset the softness in mass-gaming volumes that happened as a result of an increased levy, for local and permanent residents, implemented in 2Q19.

Genting Singapore (GENS) Could Benefit From Increased Tourist Arrivals in 2H19

• In July, inbound tourists to Singapore grew 16% m-o-m and 4% y-o-y, in particular, tourist arrivals from Mainland China surged 51% m-o-m and 8% y-o-y. We expect Singapore to see more Mainland Chinese tourists in 2H19 as they shun Hong Kong due to the ongoing protests.

Non-gaming Business to Gain But Impact on Overall Gaming Volumes May be Small

• We note gross gaming revenue in Macau has declined 3.5% y-o-y and 8.6% y-o-y in July and August but recovered in September to +0.6%. As such, we think the protests in Hong Kong might not lead to a material spillover of Macau high rollers to Singapore.
• Mass gaming volumes however may be supported by the general increase in tourist arrivals which would help to mitigate the negative impact from the 50% increase in casino levy for Singaporeans and permanent residents implemented in April this year.
• In addition, being one of the two integrated resorts (IR) in Singapore with hotels, attractions and holistic entertainment offerings, we believe non-gaming revenues are poised to benefit from rising tourism numbers.

A Chance to Win Osaka IR

• Four of the initial seven contenders for the Osaka IR have withdrawn from the Request for Concept process. This leaves Genting Singapore as one of the three bidders, along with MGM Resorts and Galaxy Entertainment Group for the Osaka IR. Media reported that the Osaka governor has hoped for its operator selection process to complete in spring 2020.
• We note that Genting Singapore has filed for a shelf registration statement for the issuance of Japanese yen-denominated bonds in Japan for a maximum amount of JPY350bn to facilitate the issuance of bonds if it is selected for the Osaka IR.

Maintain NEUTRAL With Unchanged TP of SGD0.97

• We expect total dividend for the year to be maintained at 3.5 cents/share. This gives a decent dividend yield of 4% which, we believe, would help to support the share price in the near-term. See Genting Singapore's dividend history, Genting Singapore share price.
• Longer term, we are positive on Genting Singapore on the back of a steadily growing tourism sector. Genting Singapore’s SGD4.5bn mega expansion plan, coupled with the Government’s plan to develop the Greater Southern Waterfront would continue to attract footfall to the Resort World Sentosa.
• Key downside risks include a regional economic slowdown and depreciation of regional currencies against the SGD.

Source: RHB Invest Research - 11 Oct 2019