• Genting Singapore’s Yokohama IR plans fizzle out after Dr. Takeharu Yamanaka, who campaigned on an anti-IR agenda, was elected Yokohama’s new mayor.
• Lack of catalysts could see negative share price movement in the short term but business is expected to recover as borders reopen.
• Reiterate ADD on Genting Singapore with an unchanged target price of S$0.95, pegged to 9.5x FY22F EV/EBITDA.

Unfavourable Yokohama Election Outcome

• On 22 August 2021, Dr. Takeharu Yamanaka, who ran on an anti-IR platform for his campaign, won Yokohama’s mayoral elections.
• According to Kyodo News, Dr. Yamanaka announced in his victory speech that Yokohama, where Genting Singapore (SGX:G13) is currently bidding to be the city’s IR operating partner, will not make a hosting bid as one of Japan’s IR destinations.
• This means that Genting Singapore’s Yokohama IR dream will not come to fruition despite the company being deemed the favoured candidate in the final phase of the city’s Request-for-Proposal (RFP) process.
• With Yokohama’s intended withdrawal from Japan’s IR race, we see a lack of catalysts in the near term, which could prompt unfavourable share price movement.

Relying on Border Reopening for Recovery

• Genting Singapore reported adjusted EBITDA of S$276m for 1H21, with the persistent lack of key to its recovery.

Banking on RWS 2.0 to Drive Longer-term Growth

• In 2019, Genting Singapore committed to a S$4.5bn project with the Singapore four years but new attractions could be opened along the way upon their respective completion.

Reiterate ADD on Optimistic Leisure Travel Outlook

• The potential earnings accretion from the Yokohama IR project was not factored into our target price of S$0.95, which is pegged at 9.5x of FY22F EV/EBITDA.
• We remain optimistic on the potential return of leisure travel in FY22 given initial border reopening plans laid out by the government, which include dedicated vaccinated travel lanes, that could be increasingly beneficial to Genting Singapore as vaccination rates in regional neighbours improve.

Source: CGS-CIMB Research - 23 Aug 2021