By The Edge Singapore

Atiqah Mokhtar Published on Mon, Jun 21, 2021

RHB Group Research is taking a wait-and-see stance on Genting Singapore following its submission to Yokohama City’s request for proposal (RFP) for an integrated resort (IR) project.

To that end, RHB’s Singapore research team has kept their ‘neutral’ rating for the counter with an unchanged target price of 92 cents.

In a research note dated June 18, the team views that Yokohama’s upcoming mayor election could stand in the way of Genting Singapore’s bid, given that three mayoral candidates are against the IR project and have announced intentions to cancel it if elected.

Meanwhile, incumbent mayor Fumiko Hayashi who is supportive of the IR has yet to announce her intention to run for a fourth term.

The election will be held on  August 22, just before the final selection of the IR winner.

“Despite Genting Singapore being one of the two candidates for the Yokohama IR, we believe that the market will likely stay on the sideline awaiting for the upcoming mayor election to be decided,” the team says.

The team also points out that if the Genting Singapore-led consortium wins the RFP process, it would have to apply to central authorities to have the IR license. “Three locations in Japan will be selected for an IR development and there are three other cities (Wakayama, Nagasaki and Osaka) who have expressed interests in the IR race thus far,” the team adds.

Setting aside risks from the mayor election, RHB notes that the Yokohoma IR has “attractive” potential that could spell a 30-cent increase to its target price for Genting Singapore.

The team estimates a potential annual EBITDA of US$1.6 billion being generated from the Yokama IR on the back of US$6-7 billion in gross gaming revenue per year.

In the meantime, the team views current valuations as fair, given that ongoing border restrictions continue to impact Genting Singapore’s earnings recovery.  

As at 9.33am, shares in Genting Singapore are up 0.5 cents or 0.57% higher at 88.5 cents.