SINGAPORE (July 30): UOB Kay Hian is keeping its &ldquo buy&rdquo call on Genting Singapore (GENS) with a target price of $1.38 on expectations that its valuations will trend up over time.

According to lead analyst Vincent Khoo, this will be supported by stable Singapore operations as well as GENS&rsquo s bid for Japan&rsquo s integrated resort (IR) concession as it builds up to the request for proposal (RFP) stage.

The positive note on GENS comes despite a 35% y-o-y plunge in VIP gaming volume at GENS&rsquo s casino-operator rival in Singapore, Marina Bay Sands (MBS).

&ldquo On a constant currency basis, we estimate MBS' s rolling chip volume (RCV) continued its downtrend and dropped 35% y-o-y to $7.8 billion in 2Q18, the lowest since 3Q10,&rdquo says Khoo in a flash note on July 26.

However, he expects VIP RCV growth at GENS&rsquo s Resorts World Sentosa (RWS) will outperform MBS&rsquo .

&ldquo RWS recorded positive quarterly growth in VIP RCV in 3Q17-1Q18 (after 12 consecutive quarters of y-o-y declines), in contrast with MBS&rsquo s RCV decline of 8-35% over the same period, thanks to RWS&rsquo more relaxed credit policy,&rdquo says Khoo.

&ldquo We expect RWS&rsquo s VIP volume to at least sustain in the near term. RWS&rsquo s RCV market share steadily increased from 2Q17&rsquo s 34% to 1Q18&rsquo s 49%,&rdquo he adds.

Meanwhile, UOB is maintaining its &ldquo overweight&rdquo stance on Singapore&rsquo s gaming sector, despite expecting only a flat or low single-digit growth in industry gross gaming revenue (GGR).

&ldquo Japan&rsquo s legalisation integrated resorts has put the two Singapore casino operators as strong candidates in the IR bidding, given their experience in operating in a highly-regulated casino environment and track record in contributing to the country&rsquo s tourism,&rdquo Khoo says.

The analyst notes that GENS&rsquo s share price was on the uptrend from the RFP stage in 2006 until the opening of RWS in Feb 2010, before a sharp rise in its share price on the opening.

As at 11.32am, shares of GENS are trading 1 cent lower at $1.27, implying an estimated price-to-earnings ratio of 18.4 times and a dividend yield of 2.3% for FY18.