Second half of 2016 seen unexciting for gaming sector

by **Cals** Tue 12 Jul 2016, 00:46

Second half of 2016 seen unexciting for gaming sector

By Hong Leong Investment Bank Research / The Edge Financial Daily | July 11, 2016 : 11:20 AM M

This article first appeared in The Edge Financial Daily, on July 11, 2016.

Gaming sector
Maintain neutral: We maintain a neutral call for the gaming sector in view that the second half of 2016 (2H16) will remain unexciting. However, we expect a new normalisation after absorbing the goods and services tax impact since April 16. Local consumption is also expected to improve, and we opine that the top line should stabilise and improve from here onwards with 2015 serving as a low base.

For Genting Singapore plc, we are more cautious about 2H16 for Singapore as we expect a year-on-year decline in total volume. Nevertheless, we are more positive going into 2017 and upgrade to a “buy”, with a target price (TP) of 90 Singapore cents (RM2.68).

For Genting Malaysia Bhd, the number of visitors is expected to gradually pick up from 2H16, given that various amenities under the Genting Integrated Tourism Plan (GITP) are set to roll out. However, we are of the view that growth in 2017 is largely priced in, impending more exciting catalysts to come in by 2018. Despite the positive catalysts, we maintain “hold” as we are still wary of the uncertain overseas operations, GITP execution risk and the high cost involved.

We still prefer Genting Bhd as our top pick with a TP of RM9.88 on the perspective of deep valuation. The rumoured US$15 billion (RM60 billion) initial public offering of TauRx Pharmaceuticals Ltd could yet provide another 27% upside to our TP.

We downgrade Berjaya Sports Toto Bhd to a “hold”, given that its share price has reached our TP of RM3.10 as we remain cautious about the longer-term outlook for a mature number forecast operator market. — Hong Leong Investment Bank Research, July 8