Genting Singapore's bad news likely over: Morgan Stanley

Stock Name: Genting SP
Company Name: GENTING SINGAPORE PLC

Research House: Morgan Stanly

Price Call: SELL

Target Price: 1.10

Genting Singapore’s bad news is likely at an end, but near-term catalysts are limited, Morgan Stanley says. It notes GENS’ concerns are well-known by the market, including new regulation, no local mass-market growth, limited VIP growth on lack of junkets, continued bad-debt provisions, market-share and margin concerns and low dividend payout.

It tips potential upside as Marine Life Park losses will likely decrease in 2013. But it doesn’t expect a dividend announcement near-term; “We believe that management is keeping cash for overseas gaming opportunities, including Japan and Korea, and considers additional cash as the key differentiator,” it says, adding it doesn’t see any sizeable opportunities at hand. “Political changes in Japan and Korea’s not allowing locals to gamble in the newer proposed casinos (near Incheon) could mean that GENS (and other hopefuls) will have to wait for some more time.”

Current valuations look unattractive at a premium to Macau peers, it says. It raises its target to $1.10 from $1.05 on rolling forecasts forward, keeping an Underweight call. It cuts its 2012-14 earnings estimates by 12%-14% after weaker-than-expected 3Q12 results.

Stock is up 2% to $1.255.