RHB upgraded Genting Singapore to Buy from Neutral after first-quarter earnings beat its expectations and as the company pursues VIP growth.
“Given its sturdy start to the year, we believe the recent weakness in its share price is unjustified,” RHB said in a note last week. “We foresee likely re-rating ahead, driven by further growth potential at its VIP segment and potential positive news flow from the Japanese government’s ongoing push for the legalisation of integrated resorts.”
RHB raised its 2018-19 earnings forecasts by 8-14 percent on expectations of higher volume growth in the VIP segment, pushing up its target price to S$1.42 from S$1.34.
Genting Singapore reported its first-quarter net profit rose 3 percent on-year to S$217.29 million, while revenue was up 15 percent at S$675.11 million. The company noted there was a year-earlier one-off gain of S$96.3 million on the disposal of an investment in South Korea.
RHB attributed the earnings beat to a surge in rolling volume and favorable VIP holds as well as improved bad debt provisions.
It noted management is looking to grow the VIP business in the near term, which may include being more aggressive on credit offerings to entice regional high rollers.
The stock ended Friday up 10.34 percent at S$1.28.