GENTING SP: BUY RECOMMENDATIOn

Maintain BUY with lower TP of SGD1.13. We have lowered our target price in tandem with our 3% to 6% cut in EBITDA estimates from lower visitation assumptions and lag in ramping up of table capacity. The share price has retraced by more than 26% over the past two months. Although the current valuation at 13.1x FY11 EV/EBITDA is still relatively expensive vs the regional peer average of 8x to 14x, RWS is a strong long-term growth proposition and a share price de-rating to below 80 cents will be a strong BUY (11x FY11 EV/EBITDA). The group’s balance sheet is one of the strongest among gaming companies after Genting Malaysia. We think the market may need 3-6 months to digest the company’s operating and financial performance before drawing a clearer picture of its earnings visibility and what are deemed sustainable trends, thus providing more opportunities to accumulate on weakness.

Lion Industries Corporation - Back On Track

Lion Industries’ 1QFY10 annualised profit came in spot on with our estimates. While the recovery in the coming quarter will be bumpy and its profit will contract on the sharp plunge in China’s steel prices, we are hopeful of the company staying on track to achieve normalized profit in FY10. With that, we reiterate our BUY recommendation with an unchanged 12-month target price of RM2.11, derived from a blended valuation of 6x FY10 EPS and 0.43x FY10 NTA/share.

DIALOG : BUY TP 1.5

The company’s 1QFY10 results were within expectations, mainly attributed to the consistent performance across all its divisions except the specialist products and services division, which experienced a q-o-q drop in performance. Going forward, we believe Dialog would be kept busy with the feasibility study for the Pengerang independent deepwater CTF conducted jointly with Vopak. It has also proposed a 2- for-5 bonus issue. We like Dialog as a defensive O&G stock that pays an attractive dividend yield of about 4%. Maintain Buy.

Maintain Buy on Dialog. Our target price of RM1.52 is based on a FY10 sum-of-parts valuation. Dialog is a steady defensive O&G stock that provides investors an attractive dividend yield of about 4%. It held net cash of RM143m as at 30 Sept, 2009.