Genting Singapore Plc - A big bet

Genting Singapore's annualised 1QFY09 core net loss made up 20% of our forecast and 74% of consensus. But this is broadly inline given that its Sentosa IR project is expected to incur significant pre-operating expenses towards year-end. 1QFY09 EBIT remained in the red, largely reflecting the lower business volumes and drops further exacerbated by poorer luck and negative forex effect. With unexciting prospects for its UK ops, the spotlight will be on its Sentosa IR. To-date, GS has committed S$4.67bn to the project and it recently drawdown another S$425m from its secured loan facility. 3QFY09 could play host to two key project milestones i) the revelation of a firmer opening date and ii) its application for a casino licence. No change to our FY09-11 earnings forecasts. But our SOP RNAV-based target price is raised to S$0.51 from S$0.33 as we now peg a higher 13x EBITDA multiple (10x before) to its Sentosa IR component following the higher market P/E. GS remains an UNDERPERFORM given its rich valuations. Investors seeking for a cheaper indirect exposure should consider GS' parent, Genting Bhd.

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