Genting Singapore by Merrill Lynch

Haven't update this blog for a long time.... There are some changes to my job and have been pretty busy trying to make changes and updating all information. The world cup is coming to an end soon and it may be time for the market to improve. However, the world news are still causing jitters to the stock market.

Raise PO to S$1.40, implying 14x 2011E EV/EBITDA for RWSWe lift our earnings forecasts for Genting Singapore and thus raise our SOTPbased
PO to S$1.40, implying 23% upside. Short-term catalysts include the
completion of the UK asset sale as well as quarterly earnings, which we believe
will exceed consensus estimates. Despite the strong turnaround in share price
performance recently, we maintain our high conviction Buy on this stock.
Very little dilution from MBS opening and FIFA World Cup
A recent company visit reaffirmed that its casino operation at Resorts World
Sentosa (RWS) has not seen much dilution from the Marina Bay Sands (MBS)
grand opening and the on-going FIFA World Cup. Daily casino revenue remains
close to the levels the firm attained when it operated as a monopoly in early 2010.
Slot machines remain star performer; raising earnings
Despite the increased competition from MBS, slot machine performance at RWS
remains strong. We attribute this to the strong product offering – electronic table
games, progressive jackpots and a higher payout ratio – which enables it to gain
market share from slot clubs in Singapore.
As a result, we raise our 2010 and 2011 EBITDA assumptions by 13% and 12%,
respectively, to account for slots’ sustainable strong performance, which accounts
for over 20% of group forward earnings. With the upgrade, our 2010 and 2011
EBITDA forecasts are 41% and 26% above consensus.
UK disposal positive, enhancing focus and balance sheet
The proposed disposal of its UK casino business is a positive, in our view. It
enables management to concentrate on the ramp-up of RWS over the next 1.5
years, including junket introduction, the Universal Studio extension, new hotel
offerings and the Marine Life Park. More importantly, it will further enhance the
group’s balance sheet to prepare itself for the next leg of growth – possibly in
developed market jurisdictions – by 2012.