From sea to shore

07 Apr 2011
Singapore/Hong Kong

Initiating Coverage

Genting Hong Kong  [ PDF]

From sea to shore - gaming is paying off - by Tan Teng Yee

(GENHK SP / GENG.SI, OUTPERFORM, US$0.42 - Tgt. US$0.48, Gaming)

 

We like Genting Hong Kong's land-based growth story via Resorts World Manila (RWM) which has set a new standard of product and service quality in the Philippines gaming sector. The cruise business has also turned around. The company's expansion from the cruise business to the casino industry amid the regional gaming boom looks set to pay off. We begin coverage with an OUTPERFORM call and end-CY11 SOP target price of US$0.48, which is derived from a blended CY12 EV/EBITDA of 12x, a 20% discount to regional casino rivals' 14.6x target. Potential catalysts are i) better-than-expected operational data from RWM, ii) continuous margin improvement for NCL, iii) more transparent dividend policies for NCL and Travellers, and iv) opportunities to enter other jurisdictions.