D/G to HOLD from BUY with TP cut 14% to SGD1.26
We D/G to HOLD as the shares are fairly valued on our revised TP. We see limited scope for future positive earnings surprises due to the decelerating Chinese economy and increasing competition. In addition, 2Q18 earnings were below our expectation due to a low VIP win rate. Thus, we apply a lower 10x FY18 EV/EBITDA (slightly below 5-yr mean) vs. 12x previously and cut our TP to SGD1.26 from SGD1.46 (Fig. 11). We believe GENS has a good chance of winning a Japanese casino licence (link) but it will be at least a year before a winner is announced. Read More