SINGAPORE (Oct 27): UOB Kay Hian is keeping its “hold” recommendation on Genting Singapore (GENS) with an unchanged target price of $1.15 despite strong growth reported by Las Vegas Sands Corp (LVS), the operator of Marina Bay Sands (MBS).

Shares in GENS were one of the most highly traded on Thursday and closed 4.2% higher at $1.25 after LVS reported a 13% growth in earnings to US$685 million ($932 million) for the 3Q ended September, from US$606 million a year ago.

LVS's net revenue for the 3Q17 increased 7.7% to US$3.2 billion, compared to US$2.97 billion in 3Q16.

See: Genting Singapore shares up 4.2% at $1.25; in top volume list

“MBS’ 3Q17 VIP gaming volume sustained last quarter’s growth momentum but its mass market volume remained tepid as expected,” says UOB lead analyst Vincent Khoo in a flash note on Thursday.

He estimates that gross gaming revenue (GGR) for mass market tables and slots has dropped by close to 4% y-o-y in 3Q17.

“The tepid trend in the mass market was evidenced since 2Q16, where GGR growth has been hovering in the range of -4% to +1%,” Khoo says.

Khoo is expecting GENS, which operates Resorts World Sentosa (RWS), to post a steady quarter when it announces its financial results on Nov 6.

“However, the growth quantum could be much smaller at the single digits, reflecting its circumspect credit policy,” he says.

At the same time, Khoo notes that plans by GENS’s sister company Genting Malaysia to expand its gaming capacity and open a theme park have raised concerns over a potential cannibalisation effect.

“The next growth leg for GENS is expected to take place when it submits its bid after the Japanese government issues its request for proposals (RFP),” Khoo says.

Japanese Prime Minister Shinzo Abe’s election victory on Sunday could bode well for GENS’s bid to open a casino in Japan.

The result is widely seen as a vote of approval for Abe’s agenda, which includes an effort to allow casinos to be built in the country.

Meanwhile, UOB says outlook for Genting Hong Kong has improved on the back of its cruise ship business in Asia. However, Khoo says it still has “a long way to go”.

“Significant losses would persist through 1H18, reflecting the start-up losses from new ships and shipyard operations,” he adds.

Earlier this month, Genting Hong Kong announced that it has received approval from the Singapore Exchange (SGX) to delist its shares from the Mainboard.

Genting Hong Kong gets the nod to delist from SGX Mainboard

UOB is keeping its “hold” call on Genting Hong Kong with an unchanged target price of 26 US cents.

As at 3.53pm, shares of Genting Singapore are trading 2 cents lower at $1.23, implying an estimated price-to-earnings ratio of 24.9 times and dividend yield of 2.5% for FY17.

Meanwhile, shares in Genting Hong Kong are trading 1 US cent lower at 24 US cents, implying an estimated dividend yield of 8.0% for FY17.