High quality project, in our view: The project site is sizeable – 49 ha in total with USS occupying 20 ha. USS, when opened fully will have 24 attractions of which 18 are unique to Singapore. USS will open with 20 attractions next year. A variety of rides will be present - with some appealing to younger crowd while others appealing to older crowd. A few public attractions such as the Crane Dance, a pyrotechnic show will further enhance the resort site and landscape. The project is led by experienced management team - CEO Tan Hee Teck joined the Genting Group in 1982 and has been significantly involved in management of Genting Highlands in the past.
Infrastructure being put in place to cater for IR traffic: Completion of the 3rd lane (per direction) on the vehicle bridge linking mainland to Sentosa (from 2 lanes to 3). Vehicles from mainland can also enter car park of RWS from the bridge without having to drive into Sentosa. A 620m pedestrian bridge with travellators (capacity of 8,000 guests / hour / direction) will also be constructed.
Management’s visitor arrival guidance closer to our bullish case: Management is guiding for 13MM visitors in 1st year of operations (vs. their initial guidance of 12-13MM, our estimates of 10MM). USS will be a major draw - casino business is a volume business and USS should draw the crowd. Of the 13MM visitors, 40% is expected to be locals and 60% foreigners. Our current June-10 PT of S$1.20 is based on our base case assumptions. However, if numbers come in closer to our bullish case assumptions, share price could rerate closer to the S$2 level.
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