06 Nov 2013 ~ Good Morning Singapore!
Central Execution Team - The Excellence of Execution
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Global Flash: While You Were Sleeping
Source: Marketwatch
Quote for the day : All action results from thought, so it is thoughts that matter.
- SAI BABA
Singapore: The Day AheadSINGAPORE DAYBOOK :Temasek appoints Wing Tai head as deputy chairman [SINGAPORE] Wing Tai Holdings chief Cheng Wai Keung, 63, has been appointed deputy chairman of Singapore investment firm Temasek Holdings.
The well-known property developer and businessman's new appointment at Temasek took effect on Monday. He has been a non-executive director on Temasek's board since September 2011, and is also a member of its executive committee.
Mr Cheng's appointment comes some three months after Temasek appointed Lim Boon Heng its new chairman. Mr Lim took over from S Dhanabalan, who had served as Temasek's chairman for 17 years.
Mr Dhanabalan said then that a new chairman does not mean a change in direction for Temasek as "the chairman together with the board and management determine which direction to take".
(Source: The Business Times)
MARKET SCOOP
BBR cautious despite Q3 profit jump
Oct PMI rises, points to pick-up in S'pore manufacturing
Swiber Holdings plans to sell Kreuz stake for US$206m
Chip Eng Seng Q3 net profit down 10% to S$27.2m
Singapore's COSCO Corp Q3 net profit falls 61%
Singapore's Sembcorp Marine Q3 net profit rises 12.3% on year
SATS Q2 profit down 3.2% to S$48.7m
UOB Q3 net profit up 3.3%
PCRT's Q3 DPU dips to 0.95 cents
(Source: The Business Times)
DBS VICKERS Securities says ...
GENTING SINGAPORE | HOLD | TP: S$1.64
3Q13 EBITDA came in at S$347m (+15% y-o-y, +12% q-o-q), bringing 9M13 EBITDA to 71% and 75% of consensus and our estimates respectively
After 2 quarters of unfavourable luck factor, VIP win rate rebounded to 2.9-3.0% (2Q13: 2.5%; 3Q12: 2.8%)
Similar to MBS, rolling chip continued to see strong growth (+58% y-o-y, +19% q-o-q) across the board
This helped to cushion impact from lower mass volume (tables: -10% y-o-y/q-o-q; slots: -5% y-o-y, -9% q-o-q)
If not for the higher property tax (due to one-off prior year adjustment) and impairment losses (5% of receivables vs 2Q13's 3%, largely expected given strong VIP volume growth), EBITDA margin would have improved 3.4ppts y-o-y, 4.2ppts q-o-q to 53.6%
Western Zone continues to ramp up, with visitor arrivals still rising (non-gaming +27% y-o-y, 7% q-o-q to constitute 22% of revenue)
RWS' overall GGR market share improved by 3ppts to 51%, driven by an improvement in the VIP segment to 54% (based on rolling chip), making up for the slide in the mass segment to 44%
VIP is increasingly contributing a bigger chunk of RWS' GGR (60% vs 2Q13: 53%; 3Q12: 50%)
Management turning less cautious as market uncertainty reduces with US QE tapering put on hold and global recovery on track
Nevertheless, we would watch the mass segment closely given lower local visitors and slower tourist arrivals growth, along with rising cost pressures from restrictions on foreign labour
Limited clarity on new venture, which could take another 12 months to materialise (potential M&A in Asia with minimum 12% IRR target)
As for Japan, gaming liberalisation may be delayed to 1Q14 from end-2013 although the gaming bill will likely be introduced at the current diet session
Japan could emulate Singapore by introducing an entry fee for locals
We see GENS and Las Vegas Sands as front-runners given their strong IR track record
Maintain Hold, but raise TP to S$1.64(from S$1.42) based on regional sector average of 13x FY14F EV/EBITDA
For gaming exposure, we prefer stocks leveraged to Macau and Philippines (Sands China, SJM, Travellers) given stronger growth potential
UOB KAY HIAN says ...
GENTING SINGAPORE | HOLD | TP: S$1.42
9M13 EBITDA of S$907.9m contributed 73% of our full-year forecast, in line with our
expectations, as we expect a stronger 4Q due to seasonality factor
GENS's win percentage improved to slightly above the theoretical win percentage of 2.85% in 3Q13 (2Q13:2.5%, 1Q13: 2.1%), contributing largely to the upswing in EBITDA
margin to 44.7% from 43.9% in 2Q13
However, the margin gains were slightly offset by lower contribution from the lucrative mass-marke
3Q13 rolling chip volume (RCV) grew to an estimated S$20.2b (+15% qoq, +58% yoy), with GENS's RCV market share standing at 54%, gaining RCV market leadership for the first time since 2Q11
While management did not elaborate on the growth factors, our channel check suggests the strong RCV growth was partly attributed to a baccarat tournament held during the quarter
In the conference call, management sounded upbeat on sustaining a modest to moderate the RCV growth trend
Worryingly, the mass segment defied previous flattish growth trends, contracting 10% qoq and 10% yoy in 3Q13
Looking ahead, we expect this segment to improve in 4Q13 due to year-end school holidays across the region
Impairment-to-receivables rose to 4.9% in 3Q13 (2Q13: 3.5%) as management adopted a more prudent recognition stance
While receivables continued to rise in tandem with RCV growth, management has made cumulative provisions amounting to about 38% of total receivables as of 3Q13
Management shared its optimism on Japan's gaming bill to be tabled in the upcoming Diet session in two weeks' time, and expects the gaming bill to be passed in 1H14
If successful, we expect the first Japan casino to open in 2020 at the earliest, given the lengthy legislation and construction process involved
We gauge that recently, GENS is more sanguine in engaging meaningful M&A activities
We note that management has been actively scouting for sizeable M&A opportunities within Asia, especially after raising S$2.3b through perpetual securities in 2012
Maintain HOLD and target price of S$1.42,based on 12x 2014F EV/EBITDA
We think GENS is fairly valued with share price having rallied 18% from its Aug13 low as investors gradually priced in an 'option value' for potential greenfield and M&A opportunities
Entry price is S$1.30
Prefer Genting Bhd (GENT/Target: RM12.74, or 8.5x 2014F EBITDA) within the Genting group of companies as it is a major laggard following the regional gaming sector's re-rating
Moreover, GENT offers a complete exposure to any greenfield and M&A opportunities within the Genting group
OCBC Securities says...
GENTING SINGAPORE | HOLD | TP: S$1.47
Genting Singapore (GS) reported its 3Q13 results last evening, with revenue climbing 16% YoY and 10% QoQ to S$776.8m, while adjusted EBITDA gained 15% YoY (+12% QoQ) to S$347.4m, as both gaming (saw higher volume in the premium player segment) and nongaming (daily visitation exceeded 18k) segments performed better
As a result, net profit jumped 75% YoY and 38% QoQ to S$193.0m, versus our S$190m forecast
9M13 revenue inched 1% lower to S$2154.4m, meeting 73% of our full-year forecast, while net profit also slipped 1% to S$449.1m, or 80% of our FY13 estimate
Looking ahead, management has turned slightly more positive, as compared to the previous quarter, after seeing a better spread of VIP customers coming from SE Asia and not just China; although it notes that the global economic environment is still relatively unpredictable
Building on its track record (RWS has again been named the best IR for the 3rd consecutive year at the 23rd Annual TTG Travel Awards), GS says it is seriously pursuing opportunities in the gaming, leisure/entertainment and hospitality sectors in the region
Management believes that it could have something to announce within the next 12 months
Meanwhile, GS is also watching the developments in Japan closely and it expects the legislative passage of the IR Executive Law in early 2014
With margins expected to stabilize from here as more of its nongaming operations enter into steady state, we bump up our FY13 and 14 earnings forecasts by 2.5% while leaving our revenue numbers unchanged
Our DCF-based fair value also inches up from S$1.41 to S$1.47
But given the limited upside from here, especially after the pre-results run-up, we maintain our HOLD rating
We would be buyers closer to S$1.40 |
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