PP 7767/09/2010(025354)

Malaysia
RHB Research
Corporate Highlights Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

New s Upda te
MARKET DATELINE
8 March 2010

Genting Singapore Share Price

Fair Value
:
:
S$0.905
S$1.35
Recom : Outperform
Thrills And Spills Await (Maintained)

Table 1 : Investment Statistics (GENS; Code: G13 ) Bloomberg: GENS SP

Net Net
FYE Turnover Profit ^ EPS # Growth PER C.EPS* P/CF P/NTA EV/EBITDA Gearing GDY
Dec (S$m) (S$m) (cent) (%) (x) (cent) (x) (x) (x) (%) (%)
2009 491.2 (167.0) (1.4) (191.7) n.m. - n.m. 3.9 n.m. 26.8 0.0
2010f 2,556.4 316.3 2.7 289.4 33.4 3.0 8.8 3.5 17.6 50.4 0.0
2011f 3,345.3 435.7 3.7 37.7 24.3 4.0 10.0 3.0 12.4 38.1 0.0
2012f 3,947.0 690.5 5.9 58.5 15.3 5.0 8.5 2.5 10.5 22.5 0.0
Straits Times Index ^normalised * Consensus Based On IBES # fully diluted for 2009 rights issue

♦ Universal Studios to open on 18 March… Resorts World Sentosa (RWS) Issued Capital (m shares)
Issued Cap (m shares) 3,703.6
will open its Universal Studios Singapore (USS) theme park to the public at Market
– fd for Cap(RMm)
rights 11,690.1
25,369.4
8:28am on 18 Mar. Following the sneak peek weeks during the Chinese Daily
MarketTrading Vol (m shs)
Cap(S$m) 5.9
10,579.5
New Year period, USS will first open the park to team members of RWS 52wk Price Range
Daily Trading (RM)
Vol (m shs) 6.40 -102.1
9.25
and their families on 13 March for one week as part of its staff- Major Shareholders:
52wk Price Range (S$) (%)
0.392-1.32
appreciation perks, before opening to the public. Ticket sales for the Kien
MajorHuat Realty Sdn Bhd
Shareholders: 41.5
(%)
opening phase will begin at 9 am on 10 March and same day tickets are Free floatBerhad
Genting 58.5
54.3
not available, while there will be some tickets set aside for hotel guests on
a first-come-first-served basis during this soft opening period. FYE Dec FY10 FY11 FY12
FYE Dec FY07 FY08 FY09
♦ … again on progressive basis, just like casino. Management has EPS chg (%)
EPS chg (%)
(3.1)
(6.0)
-
(5.9)
-
(6.0)
highlighted however, that this is a progressive soft opening for USS, not Var to Cons (%) (9.8) (6.8) 18.1
Var to Cons (%) (1.7) (0.0) (14.5)
unlike the casino, which means that limited tickets will be sold and that it
Share Price Chart
is possible that certain attractions may become temporarily unavailable as PE Band Chart
it continues its technical and creative adjustments during this period. To
compensate for this, ticket prices will be partially rebated by shopping and
dining vouchers valid for use at USS. There was no mention as to how long
this “preview/soft opening” phase will last except to say that it will end
when RWS is satisfied that the park is ready. Nevertheless, we understand
that on the first day USS only intends to sell 3,000 tickets, versus its full
capacity of 30,000, but would gradually ramp up the number of tickets sold
over the next two to three months, with the jump between each stage of
capacity to be relatively large (for eg: from 3,000 to 10,000 tickets).
♦ Risks include, amongst others: 1) regulatory risk – with regards to casino Relative Performance To FSSTI
Relative Performance To KLCI
licence and junket operators licences and commission structure; 2) new
market risk – Singapore is an untested market; 3) competition risk – in Genting Singapore
view of the liberalisation of the Asian casino industry and revitalisation of
previously halted construction plans in Macau; 4) operational risk –
relating to RWS, which could end up with higher-than-expected operating
costs; and 5) external risk – relating to economic stability and recovery as
well as factors like the risk of a serious contagious disease outbreak. FSSTI

♦ Forecasts and investment case. We have revised our FY10 forecasts

downwards by 3.1% to push our projected contribution from USS back by
1.5 months to beg-May (from beg-March). Although USS opens in mid-
March, we are discounting the first six weeks of operations to be
conservative, given the gradual ramping up of ticket sales and ongoing
technical adjustments. We continue to highlight a potential for earnings
upgrade in our forecasts via: (1) higher revenue per patron – due to
management’s casino target market of “above average” patrons versus our
Hoe Lee Leng
assumption which is based on a VIP:mass split of 50:50; and (2) longer-
(603) 92802184
than-expected casino monopoly in Singapore should Marina Bay Sands Hoe Lee Leng
hoe.lee.leng@rhb.com.my
open later than Apr-10. No change to S$1.35 fair value (see Table 3), (603) 92802184
hoe.lee.leng@rhb.com.my
based on blended average of EV/EBITDA (12x FY11 based on regional
average) and DCF methodologies. Maintain Outperform.

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 8 March 2010

Table 2: Universal Studios Ticket Pricing

Adult Child Senior

One-day pass S$ S$ S$
Monday to Friday (Excluding black-out dates*) 66 48 32
Weekends and black-out dates* 72 52 36

*Public holidays, eve of public holidays and super-peak periods.

Two-day pass*
All days 118 88 58

*Two-day passes are for two consecutive days

Annual Pass
Annual Pass - Fun pass 318 238 188
Annual Pass - Superstar pass 1,098 828 738

Express pass*
Weekday (non-school holidays & non Black-out dates) 30
Weekday (School Holidays) 48
Weekend and black-out dates 68

*Express passes offers ticket holders priority access to all attractions. A limited number of express passes are sold each day, and it has
to be bought in conjunction with an admission pass.
Source: RWS

Table 3: Genting Singapore’s Fair Value Calculation

SOP Valuation S$m Basis

Sales & Marketing & IT 188.1 12x CY10

DCF UK 847.5 DCF at WACC of 8.7%
DCF RWS 19,283.3 DCF at WACC of 8.4%
Rank stake 103.0 Market value of 10% stake @ 4 Mar 10
Net cash/(debt) (1,108.0) At end-4Q09

Sum of Parts 19,313.9

No. of shares (m) 11,690.1

SOP/share (S$) 1.65

EV/EBITDA Valuation

FY11 EBITDA (S$m) 1,005.0

EV/EBITDA Target (x) 12 Global EV/EBITDA FY11 Average

EV (S$m) 12,060.4
No Shares (m) 11,690.1

Implied Fair Value (S$) 1.03

BLENDED AVERAGE FAIR VALUE (S$) (SOP and EV/EBITDA) 1.34

Source: RHBRI

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 8 March 2010

Table 4. Earnings Forecasts Table 5. Forecast Assumptions

FYE Dec (S$m) FY09a FY10F FY11F FY12F FYE Dec FY10F FY11F FY12F

Turnover 491.2 2,556.4 3,345.3 3,947.0 RWS Casino Visitor Growth (%) 100.0 9.9 12.4
Turnover growth (%) (22.1) 420.4 30.9 18.0 RWS Casino Revenue/Visitor (S$) 160 176 185
Genting UK Casino Revenue Gth (%) 24.3 7.2 9.4
EBITDA (52.1) 727.4 1,005.0 1,123.7 Free cashflow (S$m) (298.4) 813.1 997.7
EBITDA margin (%) (10.6) 28.5 30.0 28.5

Depreciation (37.8) (64.4) (74.3) (76.4)

Net Interest (56.2) (272.9) (276.4) (206.4)
Associates (8.9) (8.9) (8.9) (8.9)
EI (110.6) - - -
- - - -
Pretax Profit (265.7) 381.1 545.4 831.9
Tax (11.8) (64.8) (109.7) (141.4)
PAT (277.6) 316.3 435.7 690.5
Minorities 0.0 - - -
Net Profit (277.6) 316.3 435.7 690.5
Core Net Profit (167.0) 316.3 435.7 690.5
Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank Berhad
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The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more over
a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher risks.

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Industry/Sector Ratings

Overweight = Industry expected to outperform the KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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