Company Name: GENTING HONG KONG LIMITED
Research House: Kim Eng
Kim Eng starts Genting Hong Kong (S21.SG) at Buy with a SOTP-based target price of US$0.54 ($0.69) with approximately half its valuation attributed to gaming operations as the company evolves from a cruise operator into a gaming-focused enterprise.
“The unrealised potential from its casino operations in Manila is mind-blowing, to say the least. Trading at an adjusted FY11F EV/EBITDA of 10.6x and P/B of 1.6x, GenHK is the cheapest gaming stock in the world, in our view.” Kim Eng notes, the “crown jewel” of GenHK is its Philippines gaming licence, which allows up to 2,000 tables and 7,000 slots in two locations in Manila.
“The licence is currently held by its 50%-owned associate, Travellers International Hotel Group. When fully utilised, the attributable value to GenHK from Travellers alone could amount to as much as US$0.56 per share.” It adds, the proposed IPO of Norwegian Cruise Line, expected to take place this year, could unlock more value for GenHK. Shares are off 1.3% at US$0.39.
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