GENTING SP, ocbc maintain BUY with target price $1.31
-Early 1Q10 opening draws nearer. Genting Singapore (GS) is drawing nearer to its soft opening in Jan 2010 - we understand that this would involve the casino, four hotels (likely to be progressive) and Universal Studio Singapore (USS). We believe that the construction and fitting out is on track with many segments already done up - one such attraction would be its 1600-seat Festive Grand Theatre as Resorts World Sentosa (RWS) will host the children's charity concert ChildAid from 19-21 Dec 2009.
-USS ticket prices affordable. GS has also recently announced the pricing for USS, which will open with 20 of its 24 attractions ready to thrill visitors. A 1-day adult pass will cost S$66 during the weekdays and this goes up to S$72 during the weekends; a 1-day child (under 12) pass would cost S$48 and S$52, respectively. As compared to the other regional theme parks, we think that the basic pricing point should be pretty attractive enough to draw both local and foreigner visitors. For example, the Warner Bros Movie World in Australia and the Disney Land and Universal Studios in Japan would set an adult back S$90 per day; the USS 1-day adult ticket offers a discount of between 20.1% and 26.7%, depending on whether it is a weekday or weekend pass. Only the Disney Land in Hong Kong is cheaper but not by much - the USS 1-day pass is only 5.5% to 15.1% more expensive.
-Casino likely to see strong opening. As for its main casino business, if the recent robust casino revenues reported in Macau in 3Q09 and Oct 2009 are any indication, we expect the RWS casino to see a strong opening. Based on our industry checks, we believe that GS should have no problems attracting high rollers into its casino here, where it has a ready pool to tap on from the Genting group of companies. We also do not see a shortage of walk-in customers as RWS has already confirmed 30 events bookings.
-Maintain BUY with S$1.31 fair value. Although we are only expecting RWS to turn positive in 2011, a quicker than-expected turnaround is possible should visitation numbers turn out to be better-than-expected. As such, we maintain our BUY rating and S$1.31 fair value. Risks to our estimates include a deterioration of the global economic recovery as well as costoverruns for RWS' latter phases.