OCBC kept at ' hold' call on Genting Singapore with 95 cents target price, seeing better 2017

SINGAPORE (July 6): Hit by fewer high rollers from China, and caution over MERS outbreak in South Korea affecting tourism prospects, Genting Singapore has been trading at fresh 52-week-lows.

However, from the perspective of OCBC&rsquo s Carey Wong, market&rsquo s pessimism in this gaming stock is likely priced in already. The stock is now trading more than one standard deviation below its five-year average and therefore the stock still warrants a &ldquo hold&rdquo call and target price of 95 cents in a July 6 note.

Wong notes that the lacklustre business from high rollers, especially from China, is already well flagged, although collection of debt from these recalcitrant customers remains challenging. In response, Genting Singapore has tightened lending towards the gamblers, while it devoting more resources to woo the mass premium market.

He also believes that MERS in South Korea is unlikely to have a long-term impact on the country, where Genting Singapore has a joint venture on Jeju Island due to open only in the middle of 2017. &ldquo This should give the global health authorities plenty of time to contain the outbreak,&rdquo writes Wong.

While there has been concerns that MERS will discourage travellers around the region, international tourist arrival numbers to Singapore has remained &ldquo fairly stable&rdquo at 1.2 million for April. &ldquo And as more people avoid going to South Korea due to the MERS outbreak there, some of these holidaymakers may eventually find their way to Singapore,&rdquo writes Wong.

Wong urges investors to be patient with this stock. &ldquo We believe Genting Singapore is really a 2017 story and one with a strong overseas angle. The first being the opening of its integrated resort on Jeju Island, South Korea, and the second will be the building of integrated resorts in Japan,&rdquo he writes.

As at 10.08 am, Genting Singapore is down 1.5 cents to 89.5 cents.