FY12 core EPS is 9% ahead of our expectation because of lower interest
expense at Resorts World Manila (RWM). Underlying operations at its
integrated resort were in line, though we had not expected the RWM's
interest expense to halve from an interest-rate swap.
No change to our EPS as we believe
the interest savings to be off and our
RNAV-based target price is
maintained. RWM remains a strong
proxy for GDP growth in Metro
Manila while GENHK’s cruise
operations have a unique footprint in
the Asian leisure-travel market. The
re-rating of Norwegian Cruise Lines
(NCL) since its IPO in Jan 13 is an
additional catalyst. Maintain
Financial leverage at RWM
Operationally, GENHK's three units -
Star Cruises, RWM and NCL
our expectations except for
significantly lower interest expense at
its 50%-owned RWM (almost halved
from US$61m last year to US$33m).
As guided previously by management,
RWM was hit by a weak win rate and
higher operating costs in the second
half with FY12 EBITDA only growing
9.5% yoy to US$235m despite a 14%
increase in revenue to US$752m.
bulk of its 43% net-profit growth in
FY12 was hence led by financial
leverage of lower interest expense.
We expect EBITDA margins to
narrow to 28% in FY13 from 31% in
FY12 on the back of competition from
the new Solaire casino. We expect
RWM net profit to stay flat in FY13.
NCL a key earnings driver
Net profit at 42%-owned NCL grew
35% yoy to US$168m, as expected, on
the back of operating leverage from a
2.6% increase in revenue to US$2.3bn.
NCL is expected to spur much of
GENHK's earnings in the next three
years with the delivery of one new
ship in Apr 13 and another in Jan 14.
Each ship is expected to add
US$150m to its EBITDA.
Asian cruising stable
Asian cruise revenue and EBITDA
grew 5% in 2H12, aided by a
recovering gaming business.
expect 16% EBITDA growth this year
on the deployment of its
newly-refurbished Gemini to
Shanghai. (Read Report)
Source : CIMB Research
Labels: Genting Hong Kong