Maintain Trading Buy. Quoting Genting Group’s chairman Tan Sri Lim Kok Thay, Bloomberg reported that Resorts World at Sentosa (RWS) is on track to open in early Jan 2010. While not entirely a surprise, the early opening will be a positive, in our view, as: 1) it falls within the earlier part of its 1Q2010 guidance; and
2) RWS can fully capture holiday-makers during next year’s Chinese New Year festivities. Also, RWS’s debut is very likely to be ahead of its rival’s, Marina Bay Sands (MBS). We continue to anticipate growing excitement over RWS as we approach its opening date. We retain our FY09-11 earnings estimates and end-CY10 sum-of-the-parts target price of S$1.27. Reiterate TRADING BUY with share-price catalysts likely to come from:
1) this concrete opening date;
2) more aggressive marketing efforts;
3) the award of its casino licence; and
4) a potentially longer-than-expected monopoly period if MBS opens later.
Positive development. The early Jan 2010 opening date is not entirely a surprise. GS has always guided for a RWS debut in 1Q2010. The timing excites us more as: 1) it falls within the earlier part of its 1Q2010 guidance; and 2) RWS would be able to capture the Chinese New Year crowd, as the Lunar New Year falls on 14 Feb next year. More importantly, an early Jan 2010 debut is very likely to be ahead of MBS’s expected Jan or Feb 2010 opening date. We note that RWS’s first event would be a ChildAid Concert, to take place on Dec 19-21 at its Festive Grand Theatre. Although RWS clarified earlier on that the theatre would be the only property accessible then, we do not discount the possibility of a soft opening of the resort to selected guests in conjunction with the concert.
Expecting more news flow. Besides this opening date, we expect RWS to step up its marketing efforts in the coming weeks as it seeks to build up excitement ahead of its opening. Another key event to watch for is the award of its casino licence, expected before year-end.
Still positive on RWS’s prospects. We remain optimistic on RWS’s prospects, especially with a more concrete opening date. Furthermore, RWS’s competitor appears still quite a distance form the finishing line. A potentially longer-than-expected monopoly period would be positive for RWS and could boost its numbers beyond our earlier estimates, especially with growing anticipation for the debut of Singapore’s two integrated resorts.
Valuation & Recommendation
Still a TRADING BUY. No change to our FY09-11 earnings estimates. Growing excitement over RWS as we approach its opening date and newsflow on RWS’s intensified marketing and rollout efforts, together with the award of a casino licence sometime in 4Q09 are expected to provide stock catalysts. GS remains a TRADING BUY.
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