· Genting Singapore’s share price has rerated almost back to its peak post winning Singapore IR in early 2007. Genting Singapore’s share price increased 117% since the bottom of the market in early March 2009 to S$0.89 yesterday. This is only 9% below its peak post the company winning its Singapore casino license.
· Genting Bhd’s share price, however, has lagged. Despite the 70% increase in share price since the bottom of the market, Genting Bhd is still trading at a 35% discount to its RNAV (calculated based on the current market prices of its listed subsidiaries i.e. Resorts World, Genting Singapore and Asiatic). The discount of 35% is steep vs. early 2007 post its winning of Singapore IR where we saw Genting Bhd’s share price trading at RNAV.
· We remain bullish on both Genting Bhd and Resorts World as we still see upside potential to our PTs. Our Dec-09 PT for Genting Bhd of M$6 is based on a 20% discount to SOTP (factored in PT of M$3.20 for Resorts, M$4.40 for Asiatic and S$0.61 for Genting Singapore). Marking to market its stake in Genting Singapore will add another M$0.94 to RNAV and M$0.75 to price target. Our Dec-09 PT for Resorts World of M$3.20 has factored in almost 40% discount to its excess cash position as well as a COE of 11% to its DCF of Malaysian operations. Incidentally, the market cap of Genting Singapore is now bigger than Resorts World. Note that Resorts World makes in excess of M$1B net profit a year while Genting Singapore has yet to begin its Singapore operations.
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