RHB Equity 360° - Corporate Highlights

Genting Singapore : Betting on positive prospects in a recovering
economic environment Outperform

New Coverage

- We are positive on Genting Singapore's (GS) prospects in
the longer term. We believe GS' Resorts World @ Sentosa (RWS) project
will be a lucrative one, given that it will be operating in a
guaranteed casino duopoly market and that it will be riding on
Singapore's anticipated tourism-led economic recovery. We believe
Singapore's highly lucrative gaming tax structure would also be a
major pull factor for VIP punters, and would also enable the
Singaporean casinos more flexibility in junket commission rates,
depending, of course on the yet-to-be-decided Government guidelines.

- We projected GS to record a 5-year turnover CAGR of 16.3%
p.a. from FY10, while net profit is forecasted to grow at a higher
5-year CAGR of 30%, in view of our expectation that as visitor volumes
grow and as RWS' operations become more settled, margins will improve
on the back of greater economies of scale and improved operational
efficiencies. We project net gearing to peak in FY10 at 114.6%, while
free cashflow is expected to turn positive, albeit minimally from FY10
onwards.

- To take into account the full potential of RWS, we believe
a longer term outlook must be adopted, given that a full-year
contribution from the entire RWS would only be captured from FY12
onwards. As such, we have used a simple average of the shorter-term
EV/EBITDA method and the longer-term DCF method to obtain our fair
value of S$1.33/share. We initiate coverage on Genting Singapore with
an Outperform recommendation.


Genting : Raising target price post initiation of Genting Singapore
Outperform

Company Update

- We have initiated coverage on Genting Singapore (GS) with a
fair value of S$1.33/share, which implies an upside of 22.7% from
current price levels of S$1.08/share.

- We have updated Genting's forecasts to take into account
the revised GS projections, resulting in a -2.7-3% revision in FY09-10
earnings, while our FY11 forecasts have been revised up by 2.4%.

- After including our indicative fair value for GS of
S$1.33/share (from market value previously), our SOP-based fair value
for Genting has been raised to RM9.35 (from RM8.60 previously).
Maintain Outperform.