Upgrade Genting Singapore to BUY With Higher Target Price

• We believe that the Genting Singapore-Sega Sammy JV will win the Yokohama IR RFP process. If Genting Singapore owns 50% of the JV, we estimate that a Yokohama IR will add S$1.8b to earnings and S$0.30 per share to our target price for Genting Singapore. Adding the latter to our DCF-based target price, we raise our target price for Genting Singapore to S$1.16 from S$0.86 and upgrade Genting Singapore to BUY.
• There is a risk an anti-IR Yokohama mayor may be elected on 29 Aug 2021 but Genting Singapore (SGX:G13) is a tactical BUY as we believe no value from a Yokohama IR has been imputed into its share price currently.

Straight Fight Between GENS-Sega Sammy JV and Melco

• On Monday, Yokohama announced that two groups qualified for its IR RFP process. NHK reported that the two groups are
  • a Genting Singapore-Sega Sammy (6460 JP) JV (which we did not expect) and
  • Melco Resorts & Entertainment (MLCO US).
• On contractors,
  • Genting Singapore-Sega Sammy JV named Kajima Corporation (1812 JP) while
  • Melco named Taisei Corporation (1801 JP).
• Recall that Kajima was the main contractor that constructed Genting Singapore’s Resorts World Sentosa.

Advantage GENS-Sega Sammy, in Our View

• In our view, Genting Singapore scores better in promoting the winner of its IR RFP process in the summer (Jun to Aug) of this year.
• On another note, Sega Sammy stated that it would prefer a Genting Singapore-Sega Sammy JV.

Yokohama IR to Add ≥ S$0.30 to Our Target Price for Genting Singapore

• Recall that we estimated that a Yokohama IR will generate our target price for Genting Singapore to S$1.16.

Source: Maybank Kim Eng Research - 2 Jun 2021