The worst is over upgrade to BUY. We upgrade Genting Singapore 

(GENS) to BUY with a higher TP of SGD1.67 (+24%). While GENS 

delivered results that were within expectations, VIP volumes at Resorts 

World Sentosa (RWS) positively surprised. Going forward, VIP volumes 

may positively surprise again as Singapore is now a CNY hub with 

Industrial and Commercial Bank of China (ICBC) as the clearing bank.

Within expectations. 4Q12 core net profit of SGD169.7m (-36% YoY, 

+27% QoQ) brought FY12 core net profit to SGD665.2m (-35% YoY) or 

100% of our FY12 estimate.   Final DPS of SGD0.01   (+0% YoY)   was 

also within expectations. FY12 core net profit was down 35% YoY as 

full-year VIP volume eased 5% YoY to SGD60b, and on a lower VIP 

win rate of 3.1% (-30bps YoY). 

But, VIP volumes beat our estimates. 4Q12 core net profit was down 

36% YoY due   to   a   lower   VIP win rate   of   3% (-90bps YoY),   a   higher 

percentage of VIP GGR provided   at   8%   (+4ppts YoY)   and start-up 

losses   at Marine Life Park. That said, 4Q12 VIP volume surged 56% 

YoY to SGD18.6b, its highest level. This is because Chinese VIPs, who 

account for > 50% of VIP volume, returned after China’s economy 

improved (Chart 4) and politics stabilised.

Raising earnings estimates by 9-13%. We now assume that VIP 

volumes at both casinos will grow 10% p.a., from being flattish in FY13 

and growing 8% p.a. thereafter previously (Table 1). We assume that 

RWS would still command 47% share of VIP volume going forward. The 

net impact is to raise our earnings estimates by 9-13%. Our new 

estimates imply 17% 3-year forward earnings CAGR. 

Upgrade to BUY. As earnings have recovered QoQ, we believe that 

GENS should no longer trade at 11x 12M forward EV/EBITDA or -1SD 

to its historical mean, but rather at   the historical mean 12M forward 

EV/EBITDA of 13x. Thus, we raise our TP from SGD1.35 to SGD1.67 

(Table 2) and call from HOLD to BUY.   GENS will likely benefit from 

more Chinese VIP volumes going forward, as Singapore is now a CNY hub, improving the convertibility of the CNY in Singapore.

Buy (from Hold)

Share price: SGD1.50

Target price: SGD1.67 (from SGD1.35) 

 

Maybank Kim Eng Research