Genting HK US$ - UOB KayHian cuts Genting Hong Kong to Hold vs Buy

Stock Name: Genting HK US$
Company Name: GENTING HONG KONG LIMITED
Research House: UOB KayHian

UOB KayHian downgrades Genting Hong Kong (S21.SG) to Hold vs Buy, raises target to US$0.39 vs US$0.31; says recent visits to Resorts World Manila (RWM), Penang cruise "provided assurance that while our optimistic earnings forecast for 2011 can be met, they leave little room for upside", according to Dow Jones.

Tips FY11 net profit of US$182.4 million, raises FY 2010 earnings forecast by 21.5%, assuming stronger gross gaming revenue at RWM, which expected to generate net profit of US$116.9 million vs US$78.3 million previously. Adds, downgrade follows stock's "spectacular" over-100% rally since initiation on June 10; implied target 2011F P/E, EV/EBITDA of 17.2X, 10.9X respectively have already priced in strong seasonal earnings rise in 3Q10, "and at this stage, we do not foresee significant upside to our new forecasts for RWM."



Highlights legalisation of Taiwan market, with media reports suggesting casino legalisation bill expected to be passed by end-2010, as potential catalyst as Genting HK expected to spearhead Genting Group's efforts in Taiwan. Shares +3.5% at US$0.445.