GenSp starts to move up again

Singapore Stocks- Likely to rise on US Genting S'pore in focus

 SINGAPORE, April 7 (Reuters) - Singapore shares are likely
to rise on Thursday following gains on Wall Street overnight, as
stronger commodity prices and firm global markets help to
support investor confidence.	

 Shares of casino operator Genting Singapore may be
in focus after the Business Times said Las Vegas Sands 
chief executive Sheldon Adelson suggested that a junket
representative could have been operating at its Singapore
casino, which is currently not allowed.	

The fine print – 2010 Annual Report

Event



Report (2010 AR) and highlight some points regarding accounts receivables

risk and management compensation. Based on data in the 2010 AR and

analysis in our previous report We have analysed the fine print of Genting Singapore‟ s (GENS) 2010 AnnualLinking credit extension to ROIC, we believe

GENS‟ credit extension strategy remains aggressive and short term in nature.

Impact

 The key data point we were looking for to assess the credit quality of GENS‟

accounts receivable book was the aged receivables. Unfortunately, GENS

does not provide an aged receivable, which makes assessing the credit

quality of the entire book difficult. However GENS does provide an aging of

receivables that are past their due date (ie higher risk of default). We know

that 40% (S$195m) of the S$472m RWS receivables are past their respective

due dates. Of this, S$43m (22%) are 3 to 6 months past their due date, while

S$146m (75%) are within 3 months past their due date.



not taken any charge on a further S$195m in receivables that are past their

due date, the 2010 impairment charge could be understated (and hence

EBITDA could be overstated). S$195m would represent c.15% of 2010

EBITDA. If GENS had to take any provision on the receivables past due, then

as highlighted in our

below 5%. Hence, given the provisions taken to date and the receivablesAlthough GENS took an S$82m impairment charge in 2010, given GENS hasprevious analysis, returns on credit extended would be

“past due”

extension , we see a rising risk that GENS is achieving 0-5% returns on credit– which raises the question of how long this strategy can continue.



that they are chips that have been “in session” for a long period of time.One explanation for the significant portion of receivables “past due” may be

However, to us this would indicate the extent of pseudo junket business being

undertaken – which we think may be at risk of harsher regulation.



CEO, 57% and 50% (respectively) was based on short term bonus payments

while only 11% and 26% was tied into long term stock compensation. As aThe Notes show that of the total compensation paid to the Chairman and the

comparison, in 2009 34% of Wynn Macau‟ s CEO remuneration was based on

bonuses. Galaxy‟ s CEO did not get a discretionary bonus and 40% of Sands

China‟ s CEO remuneration was on salary plus bonus.

Earnings and target price revision

 No change

Price catalyst

 12-month price target: S$1.75 based on a DCF methodology.

 Catalyst: 1Q11 results release in May 2011.

Action and recommendation



view would be harsher regulations of

credit by GENS. One positive catalyst would be approval of Macau-style

junkets.Retain Underperform view and TP: S$1.75/sh. Two catalysts supporting our„shadow‟ junkets and curtailment of