Citi lowers target for Genting Singapore to $2.40

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC
Research House: Citigroup

Citi has lowered its target price for casino operator Genting Singapore (GENS.SI) to $2.40 from S$2.60, but maintained its buy rating.

Genting Singapore said its Resorts World Sentosa (RWS) casino-resort had adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) of $389.8 million on revenues of $775.2 million for the three months ended December.

Citi said RWS had a healthy quarter-on-quarter growth in VIP volumes, compared with rival Marina Bay Sands (MBS) that saw a fall of around 20% in volumes.

The brokerage estimated that RWS had won back market share, finishing the fourth quarter with around 55% share compared with about 53% in the third quarter.

Citi said RWS and MBS together generated gross gaming revenue of around US$3.6 billion ($4.6 billion) in 2010, adding that its forecast for 2011 is US$5.1 billion as both casinos are likely to benefit from a solid Chinese New Year and the holiday periods.

However, Citi said Singapore will not see a new casino opening in the near term and it thus expects the city-state’s market to have annual organic growth of around 10%.

In comparison, the brokerage has a 25% growth forecast for Macau in 2011 as it will have new casinos coming into operation, adding that Singapore thus has a less attractive growth profile versus Macau.

At 11:40 a.m., Genting Singapore shares were down 3% at $1.92 on a volume of 212.4 million shares.