UOB KayHian upgraded Genting Singapore to Buy from Hold, saying the recent selloff has left the share with attractive valuations.
“Supported by its stable Singapore operations with new development on its bidding for Japan’s IR concession acts as event catalyst, we expect GENS’ valuation to expand over time, ” UOB KayHian said in a note on Thursday. “Meanwhile, we also do not discount the possibility of GENS monetising its non-gaming properties, which could serve as a minor catalyst.”
GENS is allowed to dispose of its non-gaming assets after 2017, the brokerage noted. It estimated that if the company injected the hotel and theme park properties into a business trust and monetized a 50 percent stake, that would generate cash of around S$0.09 cents a share.
It noted the stock was trading at 7.6 times 2018 enterprise value-to-EBITDA (earnings before interest, taxes, depreciation and amortization).
UOB KayHian kept its target unchanged at S$1.30, which it said implied EV/EBITDA of 10.4 times in 2018.
It noted that GENS’ Macau peers trade at around 13 times EV/EBITDA and Genting Malaysia was at 11 times.
Shares of Genting Singapore were up 3.88 percent at S$1.07 at 1:41 P.M. SGT on Thursday.