Singapore Company Guide Genting Singapore

Version 9 | Bloomberg: GENS SP | Reuters: GENS.SI Refer to important disclosures at the end of this report

DBS Group Research . Equity 15 May 2017

BUY Backing the house is the winning card Last Traded Price ( 12 May 2017): S$1.08 (STI : 3,255.29) Price Target 12-mth: S$1.35 (25% upside) (Prev S$1.20) Rally not over yet. We maintain our BUY call on Genting Singapore (GENS) with a revised TP of S$1.35. While GENS’ Analyst share price has rallied by over 40% since our upgrade to BUY in Mervin SONG CFA +65 6682 3715 [email protected] August last year, we believe the rally can be sustained. Our view is underpinned by expected positive newsflow including

continued recovery in earnings, details of GENS moving towards What’s New a more efficient capital structure, refresh of Resorts World  1Q17 adjusted EBITDA up 47% y-o-y to S$283m - Sentosa, and bid for a Japanese casino next year. above expectations Where we differ – Sustainable earnings recovery. Consensus has  Outperformance due to bad debts falling to multi- a HOLD recommendation on GENS given concerns about the year lows and better margins offsetting soft sustainability of its earnings recovery. We differ in this as GENS volumes has been able to grow its earnings despite VIP rolling chip and  Share price rally still not over with GENS still mass business volumes still soft, through the successful execution of its cost reduction initiatives as well as lowering its trading at -1SD EV/EBIDA bad debts given the implementation of a more selective and

conservative credit policy last year. This structurally lower cost base provides a strong platform when volumes eventually Price Relative bounce. S$ Relative Index 1.6 211 191 1.4 171 Still trading at depressed valuations. Despite the recent rally, 151 1.2 131 GENS still offers compelling value, as it trades at 10.1x FY17F 1.0 111 91 EV/EBITDA, which is in line with –1SD of its mean of 10.1x. In 0.8 71 0.6 51 addition, it trades at a c.30% discount to its Macau peers on an May-13 May-14 May-15 May-16 May-17 EV/EBITDA basis which is close to -1SD of its mean EV/EBITDA Genting Singapore (LHS) Relative STI (RHS) differential. With earnings turnaround and the potential of winning the Japanese casino bid in the medium term, we Forecasts and Valuation FY Dec (S$ m) 2015A 2016A 2017F 2018F believe GENS can re-rate closer to its average EV/EBITDA Revenue 2,401 2,228 2,264 2,352 multiple of c.13x. EBITDA 915 779 1,032 1,104 Pre-tax Profit 279 497 835 775 Valuation: Net Profit 75.2 266 573 589 On the back of a better than expected results, we raised our Net Pft (Pre Ex.) 232 257 477 589 DCF-based TP to S$1.35 from S$1.20. Our valuation excludes Net Pft Gth (Pre-ex) (%) (45.4) 10.7 85.6 23.5 EPS (S cts) 0.62 2.21 4.75 4.88 any Japan casino. EPS Pre Ex. (S cts) 1.92 2.13 3.95 4.88 EPS Gth Pre Ex (%) (45) 11 85 24 Key Risks to Our View: Diluted EPS (S cts) 0.63 2.22 4.77 4.90 Decline in VIP and mass businesses. The key risk to our positive Net DPS (S cts) 1.50 3.00 3.00 3.50 view is a slower-than-expected recovery or decline in GENS’s BV Per Share (S cts) 61.0 60.1 63.2 65.9 VIP and mass divisions. PE (X) 173.6 48.8 22.7 22.1 PE Pre Ex. (X) 56.3 50.6 27.3 22.1 At A Glance P/Cash Flow (X) 10.3 11.2 11.2 12.0 Issued Capital (m shrs) 12,025 EV/EBITDA (X) 13.1 14.8 10.1 9.0 Net Div Yield (%) 1.4 2.8 2.8 3.2 Mkt. Cap (S$m/US$m) 12,987 / 9,250 P/Book Value (X) 1.8 1.8 1.7 1.6 Major Shareholders (%) Net Debt/Equity (X) CASH CASH CASH CASH Genting Bhd 52.6 ROAE (%) 1.0 3.7 7.7 7.6 RWL 8.0 Earnings Rev (%): 19 7 GHL 6.0 Consensus EPS (S cts): 3.50 3.80 Free Float (%) 46.9 Other Broker Recs: B: 10 S: 1 H: 10 3m Avg. Daily Val (US$m) 15.9 Source of all data on this page: Company, DBS Bank, Bloomberg ICB Industry : Consumer Services / Travel & Leisure Finance L.P

ASIAN INSIGHTS VICKERS SECURITIES ed: JS / sa:YM, PY Company Guide Genting Singapore

WHAT’S NEW Outperforms again

Strong start to the year  GENS reported 1Q17 adjusted EBITDA of S$283m Potential refresh of Resorts World Sentosa which was up 47% y-o-y and 21% q-o-q. This was  During the 1Q17 results call, management above expectations with 1Q17 adjusted EBITDA announced that it is considering a refresh of its representing 31% of our full FY17F estimates. Resorts World Sentosa (RWS) property. While exact  The stronger than expected results was largely details of the refurbishment have not been disclosed attributed to lower operating costs and bad debts such as new attractions, hotels or conference facilities despite gaming volumes remaining soft. In addition, as well as the total costs, we believe this investment VIP win rate was marginally higher y-o-y, coming in may enhance RWS’s competitive position especially at 2.95% versus 2.9% in 1Q16. This resulted in given rising regional competition and potentially take adjusted EBITDA at Resort World Sentosa rising to earnings for the property to the next level. 49% from 33% in 1Q16 and higher than our 41% estimate for FY17. 3 Scts annual dividend this year but we do not rule out a  Due to the strong adjusted EBITDA performance, positive surprise next year core profit (excluding exceptional) rose 135% y-o-y  GENS guided that it remains comfortable distributing and 58% q-o-q to S$146m. 3 Scts per share in annual dividend.  However, with earnings expected to increase next Bad debt falls to multi-year low, offsetting soft volumes year and subject to the size of any potential Japanese  On the back of GENS’ successful implementation of casino investment, we believe GENS has the potential its tighter credit policies, impairment of trade to surprise investors on the upside. We have penciled receivables fell to S$15m, the lowest since the 3.5 Scts dividend next year. opening of Resort World Sentosa.  This offset the 24% y-o-y drop in VIP rolling chip Japan integrated resort update volumes to S$4.9bn, which was relatively flat q-o-q.  GENS guided that the problem gaming bill is In addition, overall mass gross gaming revenue expected to be tabled in the current diet session with (GGR) remains soft, falling q-o-q, with the mass no significant opposition for this bill. Following this, business maintaining its market share in the 38% an executive bill is expected to be tabled in the range. extraordinary session in autumn with bidding for an integrated resort potentially starting in the middle of Redemption of perpetual securities as expected 2018.  As anticipated, GENS announced that it will redeem  Beyond this, GENS also noted that there needs to be its S$2.3bn worth of outstanding perpetual securities further clarity on whether a consortium can bid for in September and October this year. We had believed multiple sites as it appears any bidding consortium GENS would call back its perpetual securities to needs to jointly seek approval from the national protect its reputation in the bond market but also to government with individual cities/prefectures. save c.S$118m worth of coupon payments on an annual basis when it has no immediate capital needs, Raising earnings estimates and increasing TP to S$1.35 and could issue bonds/raise bank debt at a lower  On the back of the stronger than expected 1Q17 interest rate. results, we raised our FY17-18F adjusted EBITDA by  We believe the redemption is the first step towards 5-13%. GENS announced intention to move towards a more  We now incorporate bad debts of c.S$15m per efficient capital structure. quarter which is in line with management guidance  While GENS has yet to announce details of its exact and lower than our earlier estimate of S$35m per plans, we envisage GENS moving towards a modest quarter. In addition, due to the slow start in volumes gearing target. this year, we now assume 0% and 1.5% y-o-y  With S$4.7bn worth of net cash as at end March growth in VIP rolling chip and mass volumes 2017, GENS is in a strong financial position to respectively versus 3% previously. However, we still redeem its perpetual securities. expect 3% bounce in volumes next year.

ASIAN INSIGHTS VICKERS SECURITIES Page 2 Company Guide Genting Singapore

 As a consequence of our higher earnings projections, we also raised our DCF-based TP to S$1.35 from S$1.20. Our TP implied a EV/EBITD multiple of c.13x which is in line with GENS historical average.

Reiterate BUY call

 With 25% upside to our revised TP of S$1.35, we reiterate our BUY call.  While GENS has rallied over 40% since we upgraded our recommendation to BUY from HOLD in August last year, we believe the rally still has legs to run, given the better expected 1Q17 results, recovery in

earnings this year and GENS still trading at -1SD EV/EBITDA. Quarterly / Interim Income Statement (S$m) FY Dec 1Q2016 4Q2016 1Q2017 % chg yoy % chg qoq

Revenue 608 558 587 (3.5) 5.2 Cost of Goods Sold (437) (347) (326) (25.4) (6.1) Gross Profit 171 211 261 52.3 23.6 Other Oper. (Exp)/Inc (55.3) (50.3) (47.9) (13.4) (4.7) Operating Profit 116 161 213 83.7 32.5 Other Non Opg (Exp)/Inc (3.7) (11.6) (6.0) (61.5) (48.6) Associates & JV Inc (1.5) (4.5) 0.93 nm nm Net Interest (Exp)/Inc 7.09 11.4 10.3 44.6 (10.2) Exceptional Gain/(Loss) (51.2) 66.6 35.1 nm (47.2) Pre-tax Profit 66.6 223 253 280.1 13.8 Tax (26.4) (33.7) (43.1) 63.3 28.0 Minority Interest (29.4) (29.7) (29.1) 1.1 (2.2) Net Profit 10.8 159 181 1,570.5 13.8 Net profit bef Except. 62.0 92.6 146 135.3 57.6 EBITDA 193 234 283 47.1 21.2 Margins (%) Gross Margins 28.2 37.8 44.5 Opg Profit Margins 19.1 28.8 36.3 Net Profit Margins 1.8 28.5 30.9

Source of all data: Company, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES Page 3 Company Guide Genting Singapore

Recovery in Macau’s gross gaming revenue CRITICAL DATA POINTS TO WATCH y-o-y growth Critical Factors 50% 40% Recovery in VIP business. Over the past couple of years, with the 30% Chinese government embarking on an anti-corruption and 20% 10% austerity drive, VIP players have generally shunned casinos 0% across Asia to avoid the scrutiny of government officials. This -10% -20% resulted in VIP gross gaming revenue (GGR) in Macau and -30% Singapore falling 40% and 34% in CY15 and 7% and 27% in -40% -50% CY16 respectively. For GENS, in combination with its greater -60% focus on credit quality, its market share has declined from mid- 50’s in 2014 to mid-30% by end 2016. Nevertheless, with

Macau’s GGR on an upward trend since August 2016, we are potentially at the start of a recovery. Assuming Singapore VIP win rate back in the normalised range follows the trends in Macau and with management now 3.5% focused on growing its top line, these bode well for GENS's business. We expect VIP rolling chip volumes to bottom out in 3.0% 2017 before a 3% bounce in 2018. This follows c.35% y-o-y fall in 2016. 2.5%

Decline in bad debts. GENS’s de-rating in 2015 and early 2016 was partially due to concerns over rising bad debts. However, 2.0% going into FY17, we believe pressure on earnings from bad debts will ease given GENS's more conservative extension of 1.5% credit to its VIP customers over the past 9-12 months. This can 1Q12 3Q12 1Q13 3Q13 1Q14 3Q14 1Q15 3Q15 1Q16 3Q16 1Q17 be seen in the bad debts falling to S$15m in 1Q17 from around VIP win rate Lower bound - 2.7% Upper bound - 3.0% S$92m in1Q16. Going forward, we estimate GENS’s impairments on receivables to fall to around S$15m per quarter GENS getting bad debts under control down from S$35m previously given management guidance. 100 25% 90 Bad debts trending down Volatility in regional currencies. The recent weakness of regional 80 20% currencies especially the MYR poses a short term headwind to 70 GENS's business. This is because China, Malaysia and Indonesia 60 15% 50 are key markets for GENS. 40 10% 30 Redemption of perpetual securities. As expected GENS 20 5% announced that it will redeem its S$2.3bn worth of perpetual 10 securities later this year. The redemption will boost GENS net 0 0% profit as it will no longer have to pay the coupon on the 1Q113Q111Q123Q121Q133Q131Q143Q141Q153Q151Q163Q16 perpetual securities. Impairment loss on receivables % of trade receivables

Recent weakening of MYR a potential headwind Steady contribution from the mass business. The market for 20.0% mass players has declined over the last couple of years, with 15.0% mass drop declining from c.US$8.7bn in 2012 to US$6.5bn in 10.0% 2016. However, with a projected increase in tourist arrivals in USD 5.0% 2017 and management’s focus on growing the top line rather 0.0% than cost management, we believe the mass business will CNY -5.0% provide a steady contribution going forward. We project a IDR 1.5% growth in volumes for the mass business in 2017. -10.0% -15.0% MYR Expansion into Japan. The Japanese recently approved the -20.0% -25.0% development of integrated resorts. Should GENS successfully Jun-14 Sep-14Dec-14Mar-15Jun-15 Sep-15Dec-15Mar-16Jun-16 Sep-16Dec-16Mar-17 win the bid for such as project, this will boost the long term CNY MYR IDR USD earnings of the group. Forward EV/EBITDA chart (x) 19.5

17.5 +2sd: 17.9x Balance Sheet: 15.5 +1sd: 15.3x Net cash position. GENS is in a strong financial position, with 13.5 Avg: 12.7x net cash of c.S$4.7bn (S$5.8bn of cash and restricted cash less 11.5 -1sd: 10.1x 9.5 gross debt of S$1.1bn) as at 31 March 2017. With operating -2sd: 7.5x cashflows of S$800m to S$1.2bn per annum, GENS should 7.5

5.5

Jul-2011 Jul-2012 Jul-2013 Jul-2014 Jul-2015 Jul-2016

Jan-2015 Jan-2012 Jan-2013 Jan-2014 Jan-2016 Jan-2017 Jan-2011 Source: Company, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES Page 4 Company Guide Genting Singapore

Leverage & Asset Turnover (x) remain in a healthy financial state despite its plans to redeem its 0.45 0.3 S$2.3bn worth of perpetual securities. 0.40 0.35 0.3 Additional liquid assets. Beyond the group’s cash, GENS also 0.30 0.25 has S$153m worth of available for sale financial assets. These 0.2 assets could be liquidated to fund any potential award of a 0.20 0.15 Japanese casino which could cost US$7-12bn. 0.2 0.10 Share Price Drivers: 0.05 0.00 0.1 Sustained recovery ahead. The anti-corruption and austerity 2014A 2015A 2016A 2017F 2018F measures in China led to a slowdown in the Asian casino Gross Debt to Equity (LHS) Asset Turnover (RHS) market in both Macau and Singapore. With the Macau market Capital Expenditure on the path of recovery (GGR rising between 1-18% since S$m 250.0 August 2016 following 25 consecutive months of declines), GENS's successful cost containment initiatives as well as 200.0 projected fall in bad debts following stricter credit criteria for its 150.0 VIP customers, we believe GENS’s earnings are on sustained 100.0 recovery path which should translate to the share price rally continuing. 50.0

0.0 Moving towards a more efficient capital structure. GENS has 2014A 2015A 2016A 2017F 2018F indicated that it plans to move towards a more efficient capital Capital Expenditure (-) structure, the first step of which was the announcement that it ROE (%) plans to redeem its perpetual securities. We believe, GENS will eventually gear up its balance sheet to a modest level from a 7.0% net cash position, which should result in better ROEs, triggering 6.0% a further re-rating of the stock. 5.0% 4.0%

Key Risks: 3.0% Hard landing in China. A hard landing in China would present 2.0% further downside risk to our earnings estimates as this will 1.0% impact the confidence and ability of GENS’s Chinese customers 0.0% to gamble at its properties. 2014A 2015A 2016A 2017F 2018F

Credit risks. GENS extends credit to its VIP customers. In the Forward PE Band (x) event it is unable to recover its receivables, GENS may face (x) higher levels of bad debts. 58.0 +2sd: 54.8x 53.0 Competition from other markets. Other markets in Asia 48.0 +1sd: 45.5x 43.0 including Macau and Philippines have been developing new 38.0 Avg: 36.3x integrated resorts which may compete with GENS for the same 33.0 -1sd: 27.0x customers. 28.0 23.0 -2sd: 17.7x Company Background 18.0 Genting Singapore Plc (GENS) operates Resorts World 13.0

Singapore which is one of the largest fully integrated resorts in

Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16

Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Southeast Asia. The company is also in the process of Jan-11 developing an integrated resort in Jeju, South Korea in PB Band (x) partnership with Landing International Development Limited. (x) 4.5

4.0 +2sd: 3.8x 3.5 3.0 +1sd: 3.0x 2.5 Avg: 2.2x 2.0 1.5 -1sd: 1.4x 1.0 0.5 -2sd: 0.6x

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Jul-11 Jul-12 Jul-13 Jul-14 Jul-15 Jul-16

Jan-14 Jan-12 Jan-13 Jan-15 Jan-16 Jan-17 Jan-11 Source: Company, DBS Bank ASIAN INSIGHTS VICKERS SECURITIES Page 5 Company Guide Genting Singapore

GENS share price versus Macau GGR y-o-y growth Remarks 50% 1.60 GENS’s share price typically 40% 1.40 tracks the direction of 30% Macau’s GGR performance

20% 1.20 Following the recovery in 10% 1.00 the Macau market, GENS’s 0% share price also started to 0.80 rebound

-10%

Jul-14 Jul-15 Jul-16

Jan-14 Jan-15 Jan-16 Jan-17

Sep-14 Sep-15 Sep-16

Nov-15 Nov-16

Nov-14

Mar-15 Mar-16 Mar-17

Mar-14

May-15 May-16 -20% May-14 0.60

-30% 0.40 -40% 0.20 -50% -60% -

Macau GGR y-o-y growth - LHS GENS share price (S$) - RHS Source: Bloomberg, STB, DBS Bank

Gaming peer comp* Closing 12-mth Mkt PE EV/EBITDA Company FYE Curncy Price Rec Target Cap FY17/ FY18/ FY17/ FY18/ 12 May 17 Price US$m 18F 19F 18F 19F Macau Galaxy Ent Dec HKD 40.55 NR N/A 22,258 23.0 21.2 13.2 12.1 Sands China Dec HKD 34.50 NR N/A 35,736 23.2 20.7 16.2 15.0 SJM Holdings Dec HKD 7.19 NR N/A 5,219 22.3 26.4 13.8 12.3 Wynn Macau Dec HKD 16.10 NR N/A 10,733 25.5 20.6 15.2 13.3 MGM China Dec HKD 16.84 NR N/A 8,211 25.9 19.3 18.0 12.1

Singapore Genting Singapore Dec SGD 1.08 BUY 1.35 9,203 27.3 22.1 10.1 9.0

* Macau stocks based on consensus estimates with Genting Singapore based on DBS Bank estimates Source: Bloomberg Finance L.P., DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES Page 6 Company Guide Genting Singapore

Income Statement (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F

Revenue 2,862 2,401 2,228 2,264 2,352 Cost of Goods Sold (1,869) (1,708) (1,539) (1,285) (1,297) Gross Profit 994 693 690 979 1,055 Other Opng (Exp)/Inc (255) (122) (207) (244) (247) Operating Profit 739 571 482 735 807 Other Non Opg (Exp)/Inc (45.6) (138) (28.3) (35.1) (35.1) Associates & JV Inc 10.6 (3.8) (6.2) (5.0) 0.0 Net Interest (Exp)/Inc 8.28 7.15 39.3 43.8 2.42 Exceptional Gain/(Loss) 92.7 (157) 9.58 96.3 0.0 Recovery in FY17 Pre-tax Profit 805 279 497 835 775 earnings due to recovery in the VIP win rate to Tax (170) (86.2) (112) (177) (186) 2.85%, lower bad debts Minority Interest (118) (118) (118) (84.9) 0.0 and successful reduction Preference Dividend 0.0 0.0 0.0 0.0 0.0 in operating expenses. Net Profit 517 75.2 266 573 589 Sustained improvement Net Profit before Except. 425 232 257 477 589 in FY18 due to 3% EBITDA 1,158 915 779 1,032 1,104 growth in VIP rolling Growth chip volumes Revenue Gth (%) 0.5 (16.1) (7.2) 1.6 3.9 EBITDA Gth (%) 0.0 (21.0) (14.9) 32.5 7.0 Opg Profit Gth (%) 0.4 (22.7) (15.5) 52.4 9.8 Net Profit Gth (Pre-ex) (%) 2.2 (45.4) 10.7 85.6 23.5 Margins & Ratio Gross Margins (%) 34.7 28.8 30.9 43.2 44.9 Opg Profit Margin (%) 25.8 23.8 21.6 32.5 34.3 Net Profit Margin (%) 18.1 3.1 12.0 25.3 25.0 ROAE (%) 7.0 1.0 3.7 7.7 7.6 ROA (%) 4.0 0.6 2.3 5.1 5.3 ROCE (%) 4.9 3.4 3.3 5.4 5.7 Div Payout Ratio (%) 23.4 239.4 135.3 62.9 71.4 Net Interest Cover (x) NM NM NM NM NM Source: Company, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES Page 7 Company Guide Genting Singapore

Quarterly / Interim Income Statement (S$m) FY Dec 1Q2016 2Q2016 3Q2016 4Q2016 1Q2017

Revenue 608 481 581 558 587 Cost of Goods Sold (437) (388) (367) (347) (326) Gross Profit 171 92.6 215 211 261 Other Oper. (Exp)/Inc (55.3) (50.2) (54.6) (50.3) (47.9) Operating Profit 116 42.5 160 161 213 Other Non Opg (Exp)/Inc (3.7) (5.3) (7.7) (11.6) (6.0) Associates & JV Inc (1.5) (3.6) 3.29 (4.5) 0.93 Net Interest (Exp)/Inc 7.09 9.53 11.3 11.4 10.3 Exceptional Gain/(Loss) (51.2) (11.4) 8.73 66.6 35.1 Pre-tax Profit 66.6 31.7 176 223 253 Tax (26.4) (12.9) (39.1) (33.7) (43.1) Minority Interest (29.4) (29.4) (29.7) (29.7) (29.1) Net Profit 10.8 (10.5) 107 159 181 Net profit bef Except. 62.0 0.83 98.1 92.6 146 EBITDA 193 116 234 234 283

Growth Revenue Gth (%) 11.1 (20.9) 20.9 (4.1) 5.2 EBITDA Gth (%) 6.2 (39.7) 101.3 0.0 21.2 Opg Profit Gth (%) 20.7 (63.4) 277.0 0.4 32.5 Net Profit Gth (Pre-ex) (%) 3.7 (98.7) 11,694.1 (5.6) 57.6 Margins Gross Margins (%) 28.2 19.3 36.9 37.8 44.5 Opg Profit Margins (%) 19.1 8.8 27.5 28.8 36.3 Net Profit Margins (%) 1.8 (2.2) 18.4 28.5 30.9

Balance Sheet (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F

Net Fixed Assets 5,809 5,487 5,242 5,168 5,095 Invts in Associates & JVs 133 130 50.9 45.9 45.9 Other LT Assets 425 559 313 289 266 Cash & ST Invts 5,011 5,002 4,963 5,256 5,723 Inventory 53.7 57.2 61.5 56.0 56.7 Debtors 1,101 646 198 150 111 Other Current Assets 139 145 618 30.4 30.4 Total Assets 12,672 12,027 11,446 10,996 11,327

ST Debt 519 167 186 186 186 Creditor 596 412 350 335 338 Other Current Liab 428 68.0 97.4 97.4 97.4 LT Debt 1,185 1,464 978 2,478 2,478 Other LT Liabilities 242 290 305 305 305 Shareholder’s Equity 9,703 9,626 9,530 7,594 7,923 Minority Interests 0.01 0.01 0.0 0.0 0.0 Total Cap. & Liab. 12,672 12,027 11,446 10,996 11,327

Non-Cash Wkg. Capital 270 368 431 (196) (238) Net Cash/(Debt) 3,308 3,371 3,799 2,592 3,059 Debtors Turn (avg days) 141.3 132.8 69.1 28.0 20.3 Creditors Turn (avg days) 170.5 134.9 112.0 126.5 123.0 Inventory Turn (avg days) 13.8 14.8 17.4 21.7 20.6 Asset Turnover (x) 0.2 0.2 0.2 0.2 0.2 Current Ratio (x) 4.1 9.0 9.2 8.9 9.5 Quick Ratio (x) 4.0 8.7 8.2 8.7 9.4 Net Debt/Equity (X) CASH CASH CASH CASH CASH Net Debt/Equity ex MI (X) CASH CASH CASH CASH CASH Capex to Debt (%) 11.5 10.7 6.0 7.5 7.5 Z-Score (X) 3.5 4.0 5.0 5.1 5.1

Source: Company, DBS Bank

ASIAN INSIGHTS VICKERS SECURITIES Page 8 Company Guide Genting Singapore

Cash Flow Statement (S$m) FY Dec 2014A 2015A 2016A 2017F 2018F

Pre-Tax Profit 805 279 497 835 775 Dep. & Amort. 419 344 297 297 297 Tax Paid (153) (127) (64.4) (177) (186) Assoc. & JV Inc/(loss) (10.6) 3.83 6.23 5.00 0.0 Chg in Wkg.Cap. (358) 267 382 38.6 (9.4) Other Operating CF 1,058 774 545 995 986 Net Operating CF 956 1,262 1,165 1,158 1,088 Capital Exp.(net) (195) (174) (69.6) (200) (200) Other Invts.(net) 0.0 0.0 0.0 0.0 0.0 Invts in Assoc. & JV (97.9) (138) (177) 0.0 0.0 Div from Assoc & JV 0.0 0.0 0.0 0.0 0.0 Other Investing CF 363 768 (23.8) 588 0.0 Repayment of Net Investing CF 69.6 455 (270) 388 (200) perpetual securities Div Paid (122) (121) (360) (360) (421) Chg in Gross Debt (531) (88.8) (475) 1,500 0.0 Capital Issues (169) (112) 0.0 0.0 0.0 Other Financing CF (159) (136) (145) (2,393) 0.0 Net Financing CF (982) (458) (980) (1,254) (421) Currency Adjustments 24.3 45.1 46.8 0.0 0.0 Chg in Cash 67.3 1,305 (38.6) 293 467 Opg CFPS (S cts) 10.7 8.23 6.51 9.28 9.09 Free CFPS (S cts) 6.20 9.00 9.10 7.94 7.36 Source: Company, DBS Bank

Target Price & Ratings History

1.16 S$ 12-mth Date of Closing S.No. T arget Rating Report Price Price 1.06 8 1: 16 May 16 0.77 0.79 HOLD 2: 26 Jul 16 0.78 0.79 HOLD 3: 05 Aug 16 0.76 0.91 BUY 0.96 9 6 4: 05 Sep 16 0.74 0.91 BUY 7 5: 04 Nov 16 0.85 0.91 BUY 0.86 6: 07 Nov 16 0.90 0.91 BUY 7: 24 Nov 16 0.96 1.15 BUY 2 5 3 8: 23 Feb 17 1.03 1.20 BUY 0.76 4 9: 17 Mar 17 1.00 1.20 BUY 1

0.66 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17

Note : Share price and Target price are adjusted for corporate actions.

Source: DBS Bank Analyst: Mervin SONG CFA

ASIAN INSIGHTS VICKERS SECURITIES Page 9 Company Guide Genting Singapore

DBS Bank recommendations are based an Absolute Total Return* Rating system, defined as follows: STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame) BUY (>15% total return over the next 12 months for small caps, >10% for large caps) HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps) FULLY VALUED (negative total return i.e. > -10% over the next 12 months) SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame) Share price appreciation + dividends

Completed Date: 15 May 2017 10:25:59 (SGT) Dissemination Date: 15 May 2017 11:11:29 (SGT)

Sources for all charts and tables are DBS Bank unless otherwise specified.

GENERAL DISCLOSURE/DISCLAIMER This report is prepared by DBS Bank Ltd. This report is solely intended for the clients of DBS Bank Ltd, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBS Bank Ltd.

The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Bank Ltd, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”) have not conducted due diligence on any of the companies, verified any information or sources or taken into account any other factors which we may consider to be relevant or appropriate in preparing the research. Accordingly, we do not make any representation or warranty as to the accuracy, completeness or correctness of the research set out in this report. Opinions expressed are subject to change without notice. This research is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group, may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies.

Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed, it may not contain all material information concerning the company (or companies) referred to in this report and the DBS Group is under no obligation to update the information in this report.

This publication has not been reviewed or authorized by any regulatory authority in Singapore, Hong Kong or elsewhere. There is no planned schedule or frequency for updating research publication relating to any issuer.

The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that:

(a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein.

Please contact the primary analyst for valuation methodologies and assumptions associated with the covered companies or price targets. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report.

ASIAN INSIGHTS VICKERS SECURITIES Page 10 Company Guide Genting Singapore

DBSVUSA, a US-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making.

ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly or indirectly, related to specific recommendations or views expressed in the report. The research analyst (s) primarily responsible for the content of this research report, in part or in whole, certifies that he or his associate1 does not serve as an officer of the issuer or the new listing applicant (which includes in the case of a real estate investment trust, an officer of the management company of the real estate investment trust; and in the case of any other entity, an officer or its equivalent counterparty of the entity who is responsible for the management of the issuer or the new listing applicant) and the research analyst(s) primarily responsible for the content of this research report or 2 his associate does not have financial interests in relation to an issuer or a new listing applicant that the analyst reviews. DBS Group has procedures in place to eliminate, avoid and manage any potential conflicts of interests that may arise in connection with the production of research reports. The research analyst(s) responsible for this report operates as part of a separate and independent team to the investment banking function of the DBS Group and procedures are in place to ensure that confidential information held by either the research or investment banking function is handled appropriately. There is no direct link of DBS Group's compensation to any specific investment banking function of the DBS Group.

COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates have a proprietary position in Genting Singapore recommended in this report as of 28 Apr 2017. 2. 3. Neither DBS Bank Ltd, DBS HK nor DBSV HK market makes in equity securities of the issuer(s) or company(ies) mentioned in this Research Report. 4. 5. 6.

Compensation for investment banking services: 7. 8. 9. 10. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

Directorship/trustee interests: 11.

Disclosure of previous investment recommendation produced: 12. DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates may have published other investment recommendations in respect of the same securities / instruments recommended in this research report during the preceding 12 months. Please contact the primary analyst listed in the first page of this report to view previous investment recommendations published by DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd (''DBSVS''), their subsidiaries and/or other affiliates in the preceding 12 months.

1 An associate is defined as (i) the spouse, or any minor child (natural or adopted) or minor step-child, of the analyst; (ii) the trustee of a trust of which the analyst, his spouse, minor child (natural or adopted) or minor step-child, is a beneficiary or discretionary object; or (iii) another person accustomed or obliged to act in accordance with the directions or instructions of the analyst. 2 Financial interest is defined as interests that are commonly known financial interest, such as investment in the securities in respect of an issuer or a new listing applicant, or financial accommodation arrangement between the issuer or the new listing applicant and the firm or analysis. This term does not include commercial lending conducted at arm's length, or investments in any collective investment scheme other than an issuer or new listing applicant notwithstanding the fact that the scheme has investments in securities in respect of an issuer or a new listing applicant.

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RESTRICTIONS ON DISTRIBUTION General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

Australia This report is being distributed in Australia by DBS Bank Ltd. (“DBS”) or DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), both of which are exempted from the requirement to hold an Australian Financial Services Licence under the Corporation Act 2001 (“CA”) in respect of financial services provided to the recipients. Both DBS and DBSVS are regulated by the Monetary Authority of Singapore under the laws of Singapore, which differ from Australian laws. Distribution of this report is intended only for “wholesale investors” within the meaning of the CA.

Hong Kong This report has been prepared by a person(s) who is not licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities in Hong Kong pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). This report is being distributed in Hong Kong and is attributable to DBS Vickers Hong Kong Limited, a licensed corporation licensed by the Hong Kong Securities and Futures Commission to carry on the regulated activity of advising on securities pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong).

For any query regarding the materials herein, please contact Paul Yong (CE. No. ASE988) at [email protected].

Indonesia This report is being distributed in Indonesia by PT DBS Vickers Sekuritas Indonesia.

Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

Singapore This report is distributed in Singapore by DBS Bank Ltd (Company Regn. No. 196800306E) or DBSVS (Company Regn No. 198600294G), both of which are Exempt Financial Advisers as defined in the Financial Advisers Act and regulated by the Monetary Authority of Singapore. DBS Bank Ltd and/or DBSVS, may distribute reports produced by its respective foreign entities, affiliates or other foreign research houses pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, DBS Bank Ltd accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact DBS Bank Ltd at 6327 2288 for matters arising from, or in connection with the report.

Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it.

ASIAN INSIGHTS VICKERS SECURITIES Page 12 Company Guide Genting Singapore

United This report is produced by DBS Bank Ltd which is regulated by the Monetary Authority of Singapore. Kingdom This report is disseminated in the United Kingdom by DBS Vickers Securities (UK) Ltd, ("DBSVUK"). DBSVUK is authorised and regulated by the Financial Conduct Authority in the United Kingdom.

In respect of the United Kingdom, this report is solely intended for the clients of DBSVUK, its respective connected and associated corporations and affiliates only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVUK. This communication is directed at persons having professional experience in matters relating to investments. Any investment activity following from this communication will only be engaged in with such persons. Persons who do not have professional experience in matters relating to investments should not rely on this communication.

Dubai This research report is being distributed by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United States This report was prepared by DBS Bank Ltd. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other In any other jurisdictions, except if otherwise restricted by laws or regulations, this report is intended only for qualified, jurisdictions professional, institutional or sophisticated investors as defined in the laws and regulations of such jurisdictions.

DBS Bank Ltd 12 Marina Boulevard, Marina Bay Financial Centre Tower 3 Singapore 018982 Tel. 65-6878 8888 e-mail: [email protected] Company Regn. No. 196800306E

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