Casino licence puts spotlight on Genting

Casino licence puts spotlight on Genting

Stock expected to do well today but some analysts see limited upside

By EMILYN YAP

THE eyes of many investors could be on the performance of Genting Singapore shares today, after Resorts World Sentosa (RWS) received its casino licence from the Casino Regulatory Authority on Saturday.

The counter put up a strong showing on Friday even before there was an announcement of the award. While the Straits Times Index took a beating and lost 2.24 per cent or 61.4 points, the stock went against the tide to put on 2.78 per cent or three cents to end at $1.11.

In fact, Genting had gained as much as 9.26 per cent or 10 cents in the afternoon, to reach an intraday high of $1.18.

A hefty 275.96 million shares changed hands, making it the most heavily traded stock on Friday.

Genting was also the only gainer among 30 STI component stocks - one striking green winner amid a sea of red.

Bank of America-Merrill Lynch research analyst Melvyn Boey believes that Genting should do well today. With the announcement on Saturday, ‘the uncertainty of (RWS) not getting the licence is behind us’, he said.

But he also saw a chance for investors to take profit. The stock looks expensive from a valuation perspective even though it has an attractive business proposition, he said.

Genting has rallied significantly in the last few months in the run-up to RWS’s opening. It reached a high of $1.30 on Dec 31, 2009.

In a Jan 27 note, DBS Vickers downgraded the counter to ‘hold’ and cut the target price to $1.20 from $1.30, noting that there would be limited upside after a ‘magnificent run’.

It added that there could be a share overhang from the mandatory conversion of some remaining convertible bonds this month.

Four hotels and more than 20 restaurants and shops have opened at the integrated resort on Sentosa. RWS has not said when the casino and the Universal Studios theme park would greet the public. An announcement is expected today from the company.

Still, many market watchers are betting that the casino will open before Chinese New Year, which arrives this Sunday. According to Mr Boey, Chinese New Year crowds at other casinos are typically two to three times that of the average.

RWS had submitted its application for a casino licence in October last year and provided the Casino Regulatory Authority with more information in December. Application processing takes about three months if the paperwork is in order.

Marina Bay Sands, the other integrated resort scheduled for launch this year, has yet to receive its casino licence.

It sent in its application in October and provided additional information in November.

Source : Straits Times - 08 February 2010

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