Brokers' take

Genting Singapore | BUY (maintained) Jan 16 close: S$1.08 Target price: S$1.23 RHB Research, Jan 16

MAINTAIN "buy" and target price of S$1.23. We believe the stock is trading at an unjustified enterprise value/Ebitda (earnings before interest, tax, depreciation and amortisation) of 7.5 times (versus regional peers' 10.6 times and its five-year historical mean of 10 times), despite stable earnings and long-term re-rating catalysts ahead. We like Genting Singapore for its potential expansion into the Japan market and the upcoming reinvestment into Resorts World Sentosa, with more news flow expected in FY19. Genting Singapore's strategy to loosen the tap for VIP customers has shown results in its Q3 2018 numbers... We expect its prudent credit extension to continue despite the slowdown in gaming volume from Macau. This should be able to attract and retain higher volumes of premium and VIP customers, which in turn will lead to a bigger gaming market share.

On the Japan casino licence bid, potential locations for the three casinos are Yokohama, Osaka and Hokkaido. In our view, it stands a chance to win, due to its strong net cash position and track record as an integrated resorts casino operator in Singapore that adheres to stringent regulatory requirements. A formal request for proposal is expected by H2 2019, followed by an announcement of the licence winners in FY20. We anticipate share price excitement this year to be driven by news flow.