Genting Singapore Plc: Outlook remains largely positive

Tourism outlook remains positive. The still upbeat outlook for tourist arrivals to Singapore in 2011 should continue to benefit Genting Singapore (GS). According to the Singapore Tourism Board (STB)1 , it expects to welcome some 12-13m tourists this year, up from last year's record 11.6m visitors, and see receipts of around S$22-24b (versus 2010's S$18.8b). The outlook for the region is also expected to remain upbeat, with the World Tourism Organization expecting international tourist arrivals to grow by a further 7-9% this year after hitting a record 204m in 2010.

Minimal impact from Japan's twin disasters. While there are valid concerns over the recent twin disasters in Japan having an impact on Asia's tourism industry, we believe that the impact to Singapore is only minimal. This as Japanese inbound tourists form only a very small percentage of the nation's total; and it has also been declining over the years. On the other hand, with the ongoing worry over the radiation contamination issue in Japan, tourists could also give the once popular tourist destination a miss and visit alternative destinations such as Singapore.

RWS geared towards family and vacation crowd. And if this pans out, we believe that GS stands to benefit, given that its integrated resort (IR), along with Universal Studios Singapore, is geared towards the family and vacation crowd. And with the reopening of the "Battlestar Galactica" ride in Feb, the opening of the long-awaited Madagascar ride before 2H10, and other attractions such as the Maritime Xperiential Museum and Marine Life Park by 2012, these should ensure a steady stream of family-oriented crowd. We also expect RWS to try to capture part of the growing MICE (Meetings, Incentives, Conventions and Exhibitions) market in the future as Singapore becomes more attractive as a MICE destination (due to its good location, infrastructure and security). US$5.5b gaming market potential. While the Casino Regulatory Authority (CRA) is taking longer than expected to approve the licensing of junket operators, industry watchers continue to maintain a pretty positive view of the gaming market. In line with our own view, we note that PricewaterhouseCoopers (PwC) expects both IRs to achieve casino revenues of US$5.5b this year, up from an estimated US$2.8b in 2010, and overtake Australia and South Korea to become Asia's second largest gaming market after Macao2 .

Maintain BUY with S$2.53 fair value. As such, we are maintaining our FY10 and FY11 estimates. Our DCF-based fair value also remains at S$2.53; maintain BUY.

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