<News Analysis> Unsolicited bids for Genting Singapore indicates its investment attractiveness
- Bloomberg reported that US gaming titan, MGM Resorts International recently approached GENS’s controlling shareholder, the Lim family (who owns 53% of the company), to express interest in a takeover/investment in GENS.
- Though undisclosed, there appears to also be other potential suitors preliminarily studying GENS as a takeover target.
- The unsolicited takeover bids highlight how undervalued GENS is, and should provide support for GENS’s share price.
- Maintain BUY with unchanged TP of S$1.00
Our thoughts
- Although GENS’s share price has outperformed most regional gaming peers (GENS: -2% YTD, sector average: -12% YTD), the company continues to priced at a significant discount at peers, trading at 6.5x CY23 EV/EBITDA (peer median = 13.8x).
- This discount is unjustified given the stark divergence in terms of reopening between Singapore and Macau – Singapore received 1.5m tourist visitors in 1H22, and expects to see another 2.5m-4.5 visitors in 2H22, whereas all Macau casinos were recently shut because of a resurgence in COVID-19 cases.
- We continue to like GENS as a reopening play given the strong momentum in Singapore’s tourist arrivals and an increased willingness among tourists to spend more.
- While it is unclear if the discussions will lead to anything, especially since there may be resistance from the Lim family to relinquish control of GENS, this development certainly underscores the attractiveness of GENS as an investment.
- No change to our TP and recommendation at this point. Maintain BUY with unchanged TP of S$1.00
