Company Name: GENTING SINGAPORE PLC
| Research House: Morgan Stanly | Price Call: SELL | Target Price: 1.05 |
Genting Singapore shares’ underperformance could continue, Morgan Stanley says, noting 2Q12 results missed its forecasts again. “Consensus estimates are not going down fast enough and GENS continues to trade at a premium over peers despite lower growth prospects and lower dividend payment.”
It doesn’t expect any significant near-term improvement; “West Zone operating cost will remain a drag, locals are not encouraged to gamble by regulators, VIP business is under pressure due to caution about extending credit, and regulators are constantly finding irregularities that could result in big fines."
It says the $2.3 billion perpetual-securities issue increases interest expenses, limiting potential dividends, and the 5.1% rate is negative compared with rival Marina Bay Sands’ recent loan refinancing. The house cuts its FY12-14 earnings estimates by 15%-21%, noting its FY12-13 ebitda forecasts are now 17%-19% below consensus. It downgrades GENS to Underweight from Equalweight and cuts its target to S$1.05 from $1.50. "We are yet to hit the bottom.” The stock is down 2.0% at $1.255 at 10:47 a.m.
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