Genting - Opening of Marina Bay Sands Delayed - BUY

Genting - Opening of Marina Bay Sands Delayed (Company Update)

Price: RM5.70
Target Price: RM6.68
Recommendation: BUY

· Marina Bay Sands delays opening. Sands’ chairman Sheldon Adelson announced that the opening of Marina Bay Sands will be delayed to early 2010 from the original end 2009 dateline. This is not a surprise as the project has been behind schedule for several months due to shortages of labour and building material especially sand and steel.

· Meanwhile, Resorts World@Sentosa has reiterated in various analyst and press briefings that it is on track for soft opening by 1Q2010. The opening features will include Universal Studios, casino and four hotels. Though the official opening date has yet to be confirmed, management guided that group will have a clearer idea of the opening date come 3Q09.

· RWS to open earlier than Marina Bay Sands? Subsequent to the project delay in Marina Bay, we believe that RWS is likely to gear up construction works to open before Sands in 2010. As of 31 Mac 09, RWS has awarded c.S$4.67b works out of the S$6.59b project costs. Installation of various fun equipments in Universal Studios has begun while testing and commissioning is scheduled to begin in Oct 2009.

· First mover advantage for RWS should it be the first to open. The opening of the first Integrated Resorts (IR) in Singapore will definitely be a major event of the year and is expected to draw large domestic and foreign visitors on novelty effect. In addition, the first IR is also poised to lock-in more casino patrons as seasoned punters are likely to sign up for the casino annual passes which cost S$2000 as opposed to S$100 fees on a per entry basis.

· Genting’s share price is expected to be buoyed by the potential opening of RWS as the first Singapore IR. Keeping our earnings forecast as we reaffirm our BUY recommendation on Genting with unchanged target price of RM6.68. Though the opening of RWS is more likely to benefit Genting’s share price, we opine that investors should not ignore Genting Malaysia (formerly Resorts) which is eyeing for M&A opportunities in distressed casino assets given its huge warchest of RM4.85b. Reiterate BUY on Genting Malaysia with target price of RM3.50.