UBS downgrades Genting Singapore (G13.SG) to Neutral vs Buy, says “future still bright, but need to pause for breath.”

Expects 3Q EBITDA of $385 million vs $504 million in 2Q; “while the headline 24% sequential decline appears steep, 2Q margin was predicated on a very high VIP hold, while the (Marina Bay Sands) ramp up in both VIP and mass during 3Q has been rapid.” 

 

Says such result may disappoint market, considering stock’s rapid rise, but if RWS delivers EBITDA in region of $375 million-$410 million in 3Q, “the bigger picture story remains perfectly valid: this is a casino resort that can generate $1.6 billion of EBITDA in year one of a seven-year duopoly.” 

 

Adds, any signs that 2Q VIP volumes at RWS unsustainable on structural reasons, “would be more of an issue.” Raises target to $2.39 vs $2.02, ups 2011E EBITDA by around 11% to $1.8 billion. 

 

Shares off 1.3% at $2.23.