Resorts still the vehicle for future overseas acquisitions. Given that Resorts remains the key cash flow generating company within the group coupled with its net cash hoard of RM4.5bn, we continue to believe that it will remain the group’s preferred casino M&A vehicle. In relation to potential acquisition opportunities in Macau, Singapore’s strict casino licensing oversight may pose a hindrance to Genting Singapore. The stock’s current undemanding valuations of 5.7x FY10 EV/EBITDA vs its historical average of 7x and the regional peer average of 7x-10x, indicates that the potential competitive risk emanating from the Singapore integrated resort has largely been priced in. Stripping out its net cash/share of 90 sen, the stock trades at 8.9x FY10 PER. Maintain BUY with a target price of RM3.25 (10% discount to RNAV of RM3.60).
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