Downgrade Genting Singapore to HOLD With Lower Target Price of S$0.86 (-26%)

• The Yokohama mayoral election resulted in the election of a resolutely anti-IR mayor. This almost certainly means that the Yokohama IR RFP process will be shelved. Though we still opine that the Genting Singapore-Sega Sammy JV was in the strongest position to win a Yokohama IR license, it is likely all academic now.
• We remove our previously ascribed S$0.30 per share contribution from a Yokohama IR from our target price for Genting Singapore to arrive at a lower target price of S$0.86.
• Downgrade Genting Singapore to HOLD.

Yokohama Elects a Resolutely Anti-IR Mayor

• Exit polls show that Takeharu Yamanaka won the Yokohama mayoral election that was carried out yesterday. Mr. Yamanaka was a former professor at Yokohama City University. Though he won as an independent, he was backed by Constitutional Democratic Party and prominent local businessman, Yukio Fujiki also known as the ‘Don of Yokohama’. Mr. Yamanaka took an anti-IR stance even before campaigning, describing casinos as ‘poison apples’.

Yokohama Shelved

• Mr. Yamanaka was also quoted as occupied by the United States Army.

Removing Share From DCF-based Target Price

• Our previous S$1.16 DCF-based target price for Genting Singapore imputed a case, our previous recommendation on Genting Singapore was as a tactical BUY.
• In our view, there was little downside risk as we gather that the market had not imputed any upside potential from a Yokohama IR. With the Yokohama mayoral election having come and gone, we downgrade Genting Singapore to HOLD.

Source: Maybank Kim Eng Research - 22 Aug 2021