Macquarie is pleased to list the following new warrant this morning:



 

Genting Hong Kong, formerly known as Star Cruises Limited, is one of the leading global leisure, entertainment and hospitality enterprises, with a presence in cruise-related and gaming businesses. Its cruise-related business in Asia is under “Star Cruises” and in North America via its 50% stake in Norwegian Cruise Line (NCL). Its gaming venture is through its 50% stake in Resorts World Manila (RWM) through the company Travellers International.

World’s 3rd largest cruise operator
Star Cruises together with NCL is the 3rd largest cruise operator in the world, with a combined fleet of 18 ships, offering approximately 35,000 lower berths. Macquarie Equities Research (MER) has an Outperform rating on Genting HK, with a target price of US$0.56 based on Sum of Parts methodology. MER expects the company’s turnaround in earnings to be driven by RWM and NCL, with earnings rising from US$68mn in 2010 to US$201mn in 2012.

Click “more” for the summary of MER’s analyst report on 16th June:

RWM on course to deliver US$223m EBITDA:
RWM, which is the monopoly private casino player in Philippines, is well on track to more than double its EBITDA in 2011 driven by increasing VIP and mass traffic as the property ramps up. MER believes that first quarter gross gaming revenue of US$1.5m/day should grow further once the new VIP Genting Club opens on 17 June and the new mass market hotel opens in 3Q11.

RWM available at 4x 2011E EV/EBITDA ex-cruise business:
MER values GENHK’s cruise businesses (Star and Norwegian Cruise Line) at 9x 2011E EV/ EBITDA (in line with listed US cruise operators), resulting in an implied valuation for RWM of only 4.3x. Given the immense growth so far and potential of the Philippine gaming market and RWM’s monopoly positioning, MER believes the widening valuation gap between GENHK and its Macau and Singapore peers is unwarranted.

Cruise business also going strong:
Norwegian Cruise Line (NCL) reported robust EBITDA growth of 39% year-on-year in 1Q11 and is set to touch a record EBITDA level of US$503m in 2011, by MER’s estimates (up from US$400m in 2010). MER thinks that the robust growth should be driven by the addition of Norwegian EPIC to its fleet in 3Q10. NCL is also adding two new ships to its fleet by 2013.

Earnings growth in 2011:
According to MER, GENHK earnings are set to grow by 141% year-on-year in 2011. MER expects the Star cruise business contribution to remain small (9% of GENHK earnings), with NCL (37%) and RWM (54%) as the key growth drivers.


 
* For a full list of Macquarie warrants, you may wish to do a Search at http://www.warrants.com.sg/en/warrants/search_e.cgi

Code	Name	Type	Expiry	Exercise Price
ON1W	GenHKMBLeCW120201	Call	01-Feb-12	US$0.50