Genting Singapore announced strong 2Q10 net profit of
S$397m (2Q09: S$30m net loss; 1Q10: S$107m net profit,
ex-exceptionals), driven by RWS’ full quarter contribution
(adjusted EBITDA: S$504m vs 1Q10’s S$109m, based on
first 45 days). RWS’ still enjoyed 1 month of “monopoly”
prior to MBS’ opening, along with above average VIP win
percentage. EBITDA margin (on normalized win rate & net
revenue after rebates) is ~52% (1Q10: 48%, ex-preopening
cost), boosted by higher-margin direct VIPs.
RWS has raised table count to 410 currently, and is
targeting 450 tables and 1500-1600 slots (1200 currently)
by end-10. After chalking 3m visitor arrivals in 2Q10 (20-
30k daily to casino), RWS has raised its 2010 target to 15m
from 13m. Seasonally stronger 2H10 should be boosted by
the F-1 race and Youth Olympic Games.
We are raising GENS’ FY10-12F earnings further by 30-
70%, on faster ramp-up, higher VIP daily net win per table,
delay in entry of junket (to 2011), and stronger EBITDA
margins. Our TP is lifted to S$2.00 (from S$1.60), based on
sum-of-parts. Correspondingly, we increase Genting Bhd’s
FY10-12F earnings estimates by 15-21% and TP to
RM10.80 (from RM9.40), based on sum-of-parts. Maintain
BUY on both.
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