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Published: Wednesday November 14, 2012 MYT 8:54:00 AM

Alliance Research: Genting Singapore’s earnings within expectations

KUALA LUMPUR: Alliance Investment Research said Genting Singapore's 9MFY12 earnings came within market expectation.

It said on Wednesday that for the cumulative nine months period, the group reported revenue of S$2,159.4m and net profit of S$515.5m.

For 3QFY2012, the group's revenue and adjusted EBITDA dropped by 4.6% and 1.4% on-quarter to S$670.2mil and S$303.2mil, respectively.

Management attributed the q-o-q decline in both revenue and adjusted EBITDA to a lower win percentage in the premium player business.

“We believe the recent weakness in its financial results were mainly impacted by (1) slowdown in regional economies dampened the inflows of foreign VIP visitations to Singapore and also increasingly cautious lending to VIPs, and (2) a weakened mass market in Singapore, which is expected to continue given the more stringent government restrictions going forward.

“We understand that the proposed amendments to Casino Control Act to contain the potential compulsive gambling habits among Singapore citizens is to be tabled in Parliament by end-2012,” it said.

Alliance Research said it would review its 2012 earnings estimates for Genting Bhd after its release of 1H results, expected to be announced on Nov 29.

“We are maintaining our Trading Buy recommendation for Genting Bhd with an unchanged price of RM10.34, maintaining a 20% holding company discount to our sum-of-parts (SOP) valuation,” it said.

The research house observed that Genting's share price has recovered recently. We believe that it was mainly due to 1) rebounding from its oversold level upon bottoming at a recent low of RM8.59, and, 2) rising investor interests on potential South Korea's gaming liberalisation.

“Nonetheless, we maintain that current market cycle remains not conducive for asset reflation play,” it said.


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