Regional Industry Focus

Singapore Gaming

DBS Group Research Equity 10 Aug 2010

Force To Be Reckon With

• Robust crowd, even as both IRs ramp up operations. STI : 2,995.06
• Preliminary numbers are encouraging, can only get KLCI : 1,360.45
better. Singapore tipped to be second largest gaming Analyst
market in Asia. Singapore Research Team
+65 6533 9688
• Upgrade earnings forecasts for both GENS and GENT
and their TPs to S$1.60 (from S$1.25) with 27% upside
TOP PICKS
and RM9.40 (from RM8.20) with 19% respectively.
Price Mkt Cap Target Price

Two’s company, not a crowd. Our recent site visits to LC$ US$m LC$ Rating

Resorts World at Sentosa (RWS) and Marina Bay Sands (MBS)

saw healthy crowds, even on weekdays – testimony that Genting
S$1.26 11,388 S$1.60 BUY
Singapore
Singapore gaming market is expanding strongly. RWS has
been more successful in reaching out to locals who tend to Genting Berhad RM7.91 9,306 RM9.40 BUY
gamble longer (40% of visitors vs MBS’ 35%), thanks to its
Source: DBS Vickers
shuttle bus services to/fro housing estates and Worldcard
membership drive. While Malaysians and Indonesians still Closing Price as of 6 Aug 2010
make up the bulk of foreign patrons, we understand Chinese Genting Singapore : Owns Resorts World at Sentosa, one of
players are catching up fast. As for Universal Studios (USS), Singapore’s two integrated resorts.
tickets were sold out till end-Jul10 (~8k daily) and should see Genting Berhad : Conglomerate with core businesses in leisure &
even stronger demand once Battlestar Galatica reopens (likely hospitality and plantation as well as power and oil & gas.
in two months) along with a new Madagascar ride. RWS’
hotel occupancy has been consistently above 80% vs MBS’
Figure 1: Singapore set to be second largest gaming market in Asia
55% (still ramping up). Singapore is seeing record tourist
arrivals (1H10: 5.5m, +22% y-o-y), with seasonally stronger Casino GDP per
Revenue GDP % of GDP capita
2H further boosted by F1 race and Youth Olympic Games.
2010F (US$b) (US$b) (%) (US$)
Taking the market by storm. MBS’ first 65-days of Macau* 20.0 5,549 0.4% 3,687
operations saw daily gross win of US$4.0m (on a normalized Singapore^ 3.2 187 1.7% 36,534
VIP win percentage of 2.85%) vs RWS’ US$4.9m for its first Korea 2.4 772 0.3% 17,078
45-days. MBS’ VIP daily win per table averaged US$24k while Malaysia 1.3 224 0.6% 6,975
mass US$4k (comparable to Macau casinos). Based on these Philippines 1.1 171 0.6% 1,745
early-days data, Singapore gaming market can well exceed 28.0 6,903 0.4%
US$3b p.a. and should see explosive growth as operations * Based on China's GDP
ramp up and junkets permitted in (3-year CAGR of 25%). We ^ Assume full-year
now expect a more even market share split between MBS and Source: World Bank, DBS Vickers
RWS in the longer run (52%: 48% vs 55%: 45% previously). Figure 2: Strong growth in Singapore gaming revenue
Maintain positive view. With better visibility, we increase Gaming rev
(US$b)
our GENS 2010-12F earnings estimates by 30-53% to factor 9 RWS MBS

in higher daily win per table and contribution from higher- 8

margin direct VIP segment. Our 2010-12F EBITDA are 12- 7 52%

18% above consensus, which will catch up after its expected 6 52%
52%
strong 2Q10 results on 12 Aug. We have also raised our 5
51%
GENT 2010-12F earnings estimates by a corresponding 16- 4
49% 48%
24%. GENS offers a more direct exposure to Singapore 3
48%
gaming and its premium valuation is justifiable given its 2 40%
51%
49%
48%

exponential growth (2011F: 57%, 2012F: 49%). While GENT 1 60%

gives a cheaper entry (7x EV/EBITDA, 15x PE vs GENS’ 14x, 0

2010F 2011F 2012F 2013F 2014F 2015F
25x respectively) along with base earnings from its other
resilient operations. Maintain Buy on both. Source: DBS Vickers

www.dbsvickers.com
Refer to important disclosures at the end of this report
ed: MY / sa: JC
Regional Industry Focus
Singapore Gaming

Encouraging start, with RWS’ and MBS’ maiden report cards
trumping markets’ expectations. Singapore’s VIP segment is
seeing average daily net win per table of US$24k, closer to
Macau casinos’ numbers (such as less VIP-centric Venetian
Macau and Sands China) rather than Malaysia’s. This is
highly commendable given Singapore IRs’ reliance on just
direct VIPs, as no junket licence has been issued to date.
Similarly for mass market segment, average daily net win
per table is comparable (if not stronger) than Macau’s 1H10
average of ~US$5,000 and way ahead of Malaysia’s 1Q10
average of US$3,641 (we believe even with the opening of
MBS, RWS’ operating numbers should not dilute very
significantly in 2Q10). Singapore’s slots segment was the
biggest positive surprise, with daily net win per slot about
double of Malaysia’s and Macau’s average of ~US$200.
We expect Singapore IRs’ results to improve further as
operations ramp up, and with the influx of junkets.

Figure 3: Singapore IRs stacking up well against regional peers

Singapore Macau Malaysia
Genting
MBS RWS Venetian Macau Sands China Wynn Macau Highlands
(US$m) (US$m) (US$m) (US$m) (US$m) (US$m) (US$m) (US$m) (US$m)
No of days in operations (days) 65 45 2Q10 1Q10 2Q10 1Q10 2Q10 1Q10 1Q10

Net revenue (based on US GAAP) 216 n/a 581 550 302 284 714 591 n/a
Gross revenue 262 ^ 245 675 677 373 362 944 774 412
Adjusted EBITDA 95 80 193 170 81 70 216 182 175
EBITDA margin, on net revenue (%) 44% n/a 33% 31% 27% 25% 30% 31% n/a
EBITDA margin, on gross revenue (%) 36% 33% 29% 25% 22% 19% 23% 23% 42%

Non-gaming as % of revenue 16% <10% (gross) 17% 19% 6% 6% 10% 11% ~15% (gross)

Gross gaming revenue 263 220 551 574 368 324 793 711 346
- VIP 111 ^ 110 278 ^ 293 220 183 ^ 618 ^ 545 121
- Mass 116 77 223 231 125 120 126 117 156
- Slots 36 33 50 50 22 22 49 48 69
Daily net win 4.0 4.9 6.1 6.4 4.0 3.6 8.7 7.9 3.8

Mix
- VIP 42% ~50% 51% 51% 60% 56% 78% 77% ~35%
- Mass 44% ~35% 40% 40% 34% 37% 16% 16% ~45%
- Slots 14% ~15% 9% 9% 6% 7% 6% 7% ~20%

No of tables 520 300 594 598 416 415 442 392 500
- VIP 70 100 158 158 78 78 221 196 125
- Mass 450 200 436 440 338 337 221 196 475
No of slots 1,450 1,300 2,181 2,185 1,180 1,166 1,185 1,175 3,800

Daily net win per table (US$) 6,699 13,856 9,268 9,752 9,118 8,093 18,496 18,783 6,149
- VIP 24,328 ^ 24,451 19,357 ^ 20,637 31,028 26,011 ^ 30,752 ^ 30,918 10,761
- Mass 3,957 8,558 5,611 5,843 4,062 3,946 6,241 6,647 3,641
Daily net win per slot (US$) 384 564 251 252 208 211 457 451 202

VIP rolling chip volume 3,884 n/a 9,766 10,050 7,221 6,407 21,700 20,200 n/a
Win % 2.18% n/a 3.36% 2.92% 3.05% 3.18% 3.22% 2.70% n/a

Mass drop 538 n/a 898 922 604 590 548 528 n/a
Win % 21.5% n/a 24.8% 25.1% 20.7% 20.3% 22.9% 22.2% n/a

Slots handle 482 n/a 702 671 407 363 1,100 920 n/a
Win % 7.5% n/a 7.1% 7.4% 5.5% 6.1% 4.5% 5.2% n/a

^ Assume normalised VIP win percentage of 2.85%

Source: Las Vegas Sands, GENS, DBS Vickers

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 Regional Industry Focus
Singapore Gaming

Raising earnings estimates and target prices. While we have
been more conservative with our assumptions in the past
due to lower visibility, preliminary data and anecdotal
evidence seem to suggest that Singapore gaming market
may well hit US$2.5b in the first year of operation and grow
to US$4b next year.
We raise our GENS 2010-12F earnings estimates by 30-53%
to factor in the following for RWS:
a) Higher VIP daily net win per table of US$20k, based on
lower-end of Macau casinos’ (vs US$12k previously).
This is lower than US$24k seen currently as we expect
more VIP tables to be opened (which should be
supported by the influx of junkets and strong growth in
private wealth).
b) Higher mass daily net win per table of US$6500, based
on higher-end of Macau casinos’ (vs US$5k previously).
Singapore IRs have the advantage of being located
close to the city centre and well connected by existing
infrastructure. RWS will likely lead MBS in the grind
segment (at least in the short-term), due to its
synergistic partnership with crowd-puller Universal
Studios, successful bus program and strong Worldcard
membership under Genting group. We expect
Singapore’s mass daily net win per table to exceed
Malaysia’s US$4k, driven by a stronger middle-income
class and higher-spending visitors (given Singapore’s
status as regional financial/international transit hub,
transformation into a global city, and more business
visitor arrivals with MICE-draw).
c) Higher daily win per slot of US$500, based on existing
preliminary data (vs US$300 previously). There could be
potential upside with the introduction of more high-
yielding electronic table games which are popular
among ASEAN players.
d) Increased contribution from higher-margin direct VIP
segment (2010F: 70% vs 60% earlier), due to delay in
licensing of junkets (likely 3Q10 vs 2Q10 previously);
e) Partially set off by more gradual ramp-up (due to
inexperienced dealers, licensing bottleneck, table
yield/service level management), and more competitive
rebates to direct VIPs (comparable to MBS’ 1.2% of
rolling chip).
Our 2010-12F EBITDA are 12-18% above consensus, which
will likely catch up after GENS expected strong 2Q10 results
on 12 Aug 2010. We have also increased our GENT 2010-
12F earnings estimates by a corresponding 16-24%. Hence,
our revised GENS and GENT target prices are S$1.60 (from
S$1.25) and RM9.40 (from RM8.20) respectively, based on
sum-of-parts. Maintain BUY on both.

Figure 4: Changes in assumptions for GENS

New assumptions Previous assumptions Change Remarks
2010F 2011F 2012F 2010F 2011F 2012F 2010F 2011F 2012F
No of tables 363 450 530 500 550 600 -27% -18% -12% More gradual ramp-up
- VIP 120 149 175 165 182 198 -27% -18% -12%
- Mass 243 302 355 335 369 402 -27% -18% -12%

Daily net win (US$m) 5.3 6.6 8.0 4.6 5.3 5.9 14% 26% 34%
Daily net win per table (US$) 10,955 11,185 11,420 7,310 7,529 7,755 50% 49% 47%
Lower-end of Macau casinos'; assume 1.5% p.a. growth
- VIP 20,000 20,300 20,605 12,000 12,360 12,731 67% 64% 62%
(highly competitive)

Higher-end of Macau casinos'; assume 3% p.a. growth in

- Mass 6,500 6,695 6,896 5,000 5,150 5,305 30% 30% 30%
line with inflation

Based on preliminary data, assume 3% p.a. growth in

Daily net win per slot (US$) 500 515 530 300 309 318 67% 67% 67%
line with inflation

VIP gaming
- Junket 30% 60% 60% 50% 60% 60% Delay in junket licensing (3Q10 vs 2Q10 previously)
- Direct 70% 40% 40% 50% 40% 40%

Rebates (% of rolling chip) 1.2% 1.2% 1.2% 1.1% 1.1% 1.1% Comparable to MBS

No of themepark visitors (m) 2.7 4.4 6.1 4.5 5.2 5.4 -39% -14% 12% More gradual ramp-up
Daily visitors ('000) 8.5 12.2 16.7 12.3 14.1 14.8 -31% -14% 12%

Source: DBS Vickers

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Regional Industry Focus
Singapore Gaming

Figure 5: Sensitivity Analysis

Earnings % Chg
2010F 2011F 2012F 2010F 2011F 2012F
1% change in: (S$m) (S$m) (S$m) (%) (%) (%)
Base 389.7 611.0 909.9

No of tables 397.6 620.6 921.5 2.0% 1.6% 1.3%

No of slots 391.6 613.2 912.6 0.5% 0.4% 0.3%

Daily net win per table

- VIP 392.9 618.3 923.1 0.8% 1.2% 1.5%
- Mass 394.4 622.9 931.7 1.2% 2.0% 2.4%
Daily net win per slot (US$) 391.6 615.5 918.2 0.5% 0.7% 0.9%

VIP gaming split

- Junket (+10 ppt) 400.7 624.8 926.5 2.8% 2.3% 1.8%

Rebate (+100bps) 364.0 592.4 887.8 -6.6% -3.0% -2.4%

Junket commission (+100bps) 378.7 583.2 876.7 -2.8% -4.5% -3.6%

Staff cost 387.0 604.7 899.0 -0.7% -1.0% -1.2%

Overheads 388.2 609.0 907.6 -0.4% -0.3% -0.3%

Visitors to Universal Studios 390.0 611.8 911.4 0.1% 0.1% 0.2%

Source: DBS Vickers

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 Regional Industry Focus
Singapore Gaming

Figure 6: GENS sum-of-parts and assumptions

S$ m S$/share % SOP
NPV of RWS 20,247.6 1.66 107%
Net proceeds from disposal of UK operations 688.8 0.06 4%
Pacific Lottery Club 1.0 0.00 0%
Rank Group 108.3 0.01 1%
21,045.7
Net Cash/(Debt) (2,241.5) (0.18) -12%
Interest savings (assume debt repayment with
155.0 0.01 1%
proceeds from disposal of Genting UK)
Sum-of-parts 18,959.1 1.56 100%
No of shares (m) 12,161.9
Sum-of-parts/share (S$) 1.56

RWS - Discounted cashflows (S$m) 2010 2011 2012 2013 2014 2015
EBIT 722.2 979.1 1,330.8 1,609.2 1,900.0 2,237.8
Less : Tax on EBIT (122.8) (166.5) (226.2) (273.6) (323.0) (380.4)
599.5 812.7 1,104.6 1,335.6 1,577.0 1,857.3
Add : Depreciation & non-cash items 175.0 220.0 220.0 220.0 220.0 220.0
Operating Cashflow (After-tax) 774.5 1,032.7 1,324.6 1,555.6 1,797.0 2,077.3
Less: Chg in Working Capital (154.9) (206.5) (264.9) (311.1) (359.4) (415.5)
Less: Capex (2,200.0) (1,000.0) (200.0) (200.0) (200.0) (200.0)
(1,580.4) (173.9) 859.7 1,044.5 1,237.6 1,461.9
Terminal Value 29,713.5
FCFF (S$m) (1,580.4) (173.9) 859.7 1,044.5 1,237.6 31,175.3

PV (1,462.5) (148.9) 681.1 765.8 839.7 19,572.2

Key Assumptions

Total Revenue (US$m) 2,228.3 2,921.5 3,672.7 4,183.5 4,779.5 5,466.7

Total EBITDA (US$m) 700.1 918.5 1,206.9 1,427.7 1,648.9 1,905.3
EBITDA margin 31% 31% 33% 34% 34% 35%

Casino revenue (US$m) 1,688.2 2,119.0 2,548.0 2,952.5 3,431.5 3,990.3

- VIP 874.1 1,100.3 1,315.4 1,511.4 1,738.4 2,004.3
- Grind 576.8 736.8 893.8 1,042.2 1,222.0 1,436.3
- Slots 237.3 282.0 338.8 398.8 471.1 549.7
Daily net win 5.3 6.6 8.0 9.2 10.7 12.5

Distribution 100% 100% 100% 100% 100% 100%

- VIP 52% 52% 52% 51% 51% 50%
- Grind 34% 35% 35% 35% 36% 36%
- Slots 14% 13% 13% 14% 14% 14%

VIP gaming
- Junket 30% 60% 60% 60% 60% 60%
- In-house 70% 40% 40% 40% 40% 40%
No of tables 363 450 530 600 670 750
- VIP 120 149 175 198 221 248
- Mass 243 302 355 402 449 503
No of slots 1,300 1,500 1,750 2,000 2,250 2,500
Daily net win per table (US$) 10,955 11,185 11,420 11,660 12,105 12,568
Daily net win per slot (US$) 500 515 530 546 574 602

Cost (US$m)
Gaming tax % (including 7% GST)
- VIP 12% 12% 12% 12% 12% 12%
- Grind 21% 21% 21% 21% 21% 21%
Junket commission (% of rolling chip) 1.5% 1.5% 1.5% 1.5% 1.5% 1.5%
Rebates for in-house VIP (% of rolling chip) 1.2% 1.2% 1.2% 1.2% 1.2% 1.2%
No of staff 10,000 10,000 10,000 10,000 10,000 10,000
Average wage 2,020 2,323 2,671 3,072 3,533 4,063
Growth % YOY 15% 15% 15% 15% 15%

Other overheads (% of sales) 8% 8% 8% 8% 8% 8%

Non-gaming revenue (S$m) 540.1 802.4 1,124.7 1,231.1 1,348.0 1,476.5

% of total revenue 19% 22% 24% 23% 22% 21%
No of visitors to USS (m) 2.7 4.4 6.1 6.4 6.7 7.0
Average ticket price (S$) 70 74 77 81 85 89
Hotel ARR (S$/room-night) 250 263 276 289 304 319
Occupancy rate (%) 80% 85% 90% 90% 90% 90%
Source: DBS Vickers

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Regional Industry Focus
Singapore Gaming

Figure 7: GENT sum-of-parts

No of Forex Value/
Listed assets Stake Share price shares rate Value share Basis
(LC$) (m) (RM/$) (RM m) (RM)
Genting Malaysia 46.2% 2.30 5,905.5 1.00 6,278.6 1.69 Target price
Genting Plantation 54.6% 6.90 757.9 1.00 2,855.5 0.77 Target price
Genting Singapore 51.8% 1.60 12,161.0 2.30 23,181.7 6.26 Target price
Landmarks 30.3% 1.39 480.7 1.00 111.2 0.03 Market value
Total value of listed assets 32,427.0 8.75
Non-listed assets
Management fees from Resorts 4,824.1 1.30 NPV (1% long-term growth, 7.4% WACC)
Genting Sanyen Power 58.6% 1,782.3 0.48 Based on sector's 13x 2011 PE
China power plants 463.5 0.13 Based on sector's 12x 2011 PE
India power plants 431.7 0.12 Based on sector's 16x 2011 PE
Genting Oil & Gas 95.0% 100.8 0.03 Based on sector's 9x 2011 PE
Based on British Gas' sale of its 50% stake
Muturi PSC Deferred Consideration 336.0 0.09
for US$236m (May 2004)
Sub-total 7,938.4 2.14
Less: Net cash (ex-listed subsidiaries) (1,781.8) (0.48)
Total 38,583.5 10.41
Fully diluted no of shares (m) 3,705.3
RNAV/share (RM) 10.41
Less: Holding co discount (10%) (1.04)
Adjusted RNAV/share (RM) 9.37

Segments Share of
Value/ 2010F 2011F
share SOP EBITDA EBITDA
(RM) (%) (%) (%)
Leisure 9.25 88.9% 86.4% 88.1%
Msia 3.00 28.8% 43.8% 38.9%
Overseas 6.26 60.1% 42.6% 49.2%
Plantation 0.77 7.4% 6.7% 5.9%
Property 0.03 0.0% 0.5% 0.4%
Power 0.72 6.9% 7.0% 6.0%
Oil & gas 0.12 1.1% 0.3% 0.3%
Others - - -0.8% -0.7%
Net cash (0.48) -4.6% - -
Holding co discount (10%) (1.04)
Total 9.37 100% 100% 100%
Source: DBS Vickers

Figure 8: Peer comparison

Share Market Net Profit 3-year EV/EBITDA 2011F EV/ PE 2010F P/BV
earnings EBITDA vs
price Cap 2009 2010F 2011F 2012F CAGR 2009 2010F 2011F 2012F growth 2009 2010F 2011F 2012F Divd Yield
(LC$) (USDm) (USDm) (USDm) (USDm) (USDm) (%) (x) (x) (x) (x) (x) (x) (x) (x) (x) (%) (x)
Macau
Sands China 11.90 12,336 214 362 418 434 27% 17.6 15.6 13.6 11.3 1.0 57.7 26.9 26.0 18.9 0.0 3.3
Wynn Macau 13.64 9,114 266 408 478 519 25% 23.0 15.8 13.1 11.7 0.7 34.2 22.1 19.5 17.1 0.0 18.8
SJM 6.93 4,564 117 296 338 374 47% 13.1 7.7 6.4 8.5 0.3 41.1 16.5 13.8 12.9 2.5 4.1
Galaxy 5.41 2,748 15 58 150 283 169% 21.4 17.9 11.3 6.9 0.2 56.8 47.4 18.4 9.7 0.0 2.6
Melco 3.28 520 (187) (5) 16 (19) n.m. n.m. 29.8 27.3 28.4 n.m. n.m. n.m. 78.1 n.m. 0.0 0.6
Average 29,282 425 1,119 1,399 1,591 55% 18.9 14.1 11.7 10.0 0.6 68.9 26.2 20.9 18.4 0.5 5.9

US
Las Vegas Sands 28.57 18,866 (354) 322 606 914 n.m. 36.9 16.7 12.5 10.1 0.2 n.m. 119.5 47.4 28.4 0.1 3.4
MGM Mirage 10.73 4,735 (1,292) (401) (260) (115) n.m. 14.7 14.6 12.1 10.8 1.1 n.m. n.m. n.m. n.m. 0.0 1.3
Wynn 90.31 11,136 21 168 237 332 152% 19.0 13.5 12.2 11.2 0.6 531.2 101.4 67.7 48.9 0.5 3.6
Total/ Average 34,737 (1,626) 89 583 1,132 n.m. 22.2 15.2 12.3 10.6 0.4 n.m. 391.0 59.5 30.7 0.2 2.7

Asia-Pacific
Genting 7.91 9,310 350 515 620 780 31% 12.0 8.2 7.0 5.7 0.2 26.6 18.1 15.0 11.9 1.4 2.2
Genting Malaysia 2.85 5,347 440 384 397 417 -2% 5.8 6.2 5.6 6.3 (2.1) 12.1 13.9 13.5 12.8 2.2 1.6
Genting Singapore 1.26 11,353 (29) 289 452 674 n.m. 227.2 19.0 14.2 10.3 0.1 n.m. 39.3 25.1 16.8 0.0 3.6
Kangwon Land 21,200 3,904 336 376 397 411 7% 6.8 5.8 5.5 5.3 0.7 11.1 10.6 10.1 9.7 4.7 2.4
Crown 8.15 5,660 (1,097) 258 333 390 n.m. 9.5 10.5 9.3 8.6 2.7 n.m. 22.0 17.1 14.9 4.4 1.9
TabCorp 6.66 3,736 478 442 449 494 1% 5.5 5.7 5.5 5.1 2.6 7.1 8.3 8.3 7.6 8.7 1.2
Sky City Ent 3.06 1,282 84 97 102 110 10% 8.0 7.6 7.7 7.4 2.6 13.1 13.3 12.4 11.5 5.1 2.3
Total/ Average 40,592 561 2,360 2,751 3,276 7% 11.1 8.6 7.7 6.8 0.4 72.3 17.2 14.8 12.4 3.8 2.2

Casino sector
total/average 104,611 (639) 3,567 4,733 5,999 n.m. 16.1 12.0 10.2 8.9 0.5 n.m. 29.3 22.1 17.4 2.1 3.5
Source: Respective companies, Bloomberg, DBS Vickers
Closing price as of 6 Aug 2010

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 Regional Industry Focus
Singapore Gaming

Figure 9: GENS financial statements

Income Statement (S$ m) Balance Sheet (S$ m)
FY Dec 2009A 2010F 2011F 2012F FY Dec 2009A 2010F 2011F 2012F
Turnover 491 3,356 4,224 5,132 Net Fixed Assets 4,538 6,321 6,858 6,751
Cost of Goods Sold (419) (2,434) (2,988) (3,549) Invts in Associates & JVs 46 37 28 19
Gross Profit 72 922 1,235 1,583 Other LT Assets 1,409 1,409 1,409 1,409
Other Opng (Exp)/Inc (38) (217) (262) (258) Cash & ST Invts 2,851 2,125 1,778 2,340
Operating Profit 34 705 973 1,325 Inventory 13 24 30 35
Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 127 186 222 257
Associates & JV Inc (9) (9) (9) (9) Other Current Assets 73 144 144 144
Net Interest (Exp)/Inc (52) (227) (228) (220) Total Assets 9,058 10,246 10,469 10,955
Exceptional Gain/(Loss) (238) 0 0 0
Pre-tax Profit (266) 470 736 1,096 ST Debt 97 97 97 97
Tax (12) (80) (125) (186) Other Current Liab 714 738 786 887
Minority Interest 0 0 0 0 LT Debt 3,654 4,185 3,748 3,223
Net Profit (278) 390 611 910 Other LT Liabilities 458 0 0 0
Net Profit before Except. (39) 390 611 910 Shareholder’s Equity 4,134 5,227 5,838 6,748
EBITDA 63 914 1,226 1,574 Minority Interests 0 0 0 0
Total Cap. & Liab. 9,058 10,246 10,469 10,955
Sales Gth (%) (23.7) 583.3 25.8 21.5
EBITDA Gth (%) (17.6) 1,354.3 34.2 28.3 Non-Cash Wkg. Capital (500) (383) (391) (452)
Opg Profit Gth (%) (1.8) 1,968.7 38.0 36.2 Net Cash/(Debt) (900) (2,157) (2,067) (980)
Net Profit Gth (%) 122.4 (240.4) 56.8 48.9
Effective Tax Rate (%) N/A 17.0 17.0 17.0
Cash Flow Statement (S$ m) Rates & Ratio
FY Dec 2009A 2010F 2011F 2012F FY Dec 2009A 2010F 2011F 2012F
Pre-Tax Profit (266) 470 736 1,096 Gross Margins (%) 14.6 27.5 29.2 30.8
Dep. & Amort. 38 217 262 258 Opg Profit Margin (%) 6.9 21.0 23.0 25.8
Tax Paid (8) (80) (125) (186) Net Profit Margin (%) (56.5) 11.6 14.5 17.7
Assoc. & JV Inc/(loss) 9 9 9 9 ROAE (%) (8.1) 8.3 11.0 14.5
Chg in Wkg.Cap. (32) 127 8 61 ROA (%) (4.0) 4.0 5.9 8.5
Other Operating CF 190 0 0 0 ROCE (%) 0.5 6.6 8.4 11.1
Net Operating CF (69) 743 890 1,237 Div Payout Ratio (%) N/A 0.0 0.0 0.0
Capital Exp.(net) (1,994) (2,000) (800) (150) Net Interest Cover (x) 0.6 3.1 4.3 6.0
Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.1 0.3 0.4 0.5
Invts in Assoc. & JV 0 0 0 0 Debtors Turn (avg days) 94.1 17.0 17.7 17.0
Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 370.2 105.2 102.0 92.8
Other Investing CF (5) 0 0 0 Inventory Turn (avg days) 8.2 3.1 3.6 3.6
Net Investing CF (1,999) (2,000) (800) (150) Current Ratio (x) 3.8 3.0 2.5 2.8
Div Paid 0 0 0 0 Quick Ratio (x) 3.7 2.8 2.3 2.6
Chg in Gross Debt 2,419 531 (437) (525) Net Debt/Equity (X) 0.2 0.4 0.4 0.1
Capital Issues 1,510 0 0 0 Net Debt/Equity ex MI (X) 0.2 0.4 0.4 0.1
Other Financing CF (102) 0 0 0 Capex to Debt (%) 53.2 46.7 20.8 4.5
Net Financing CF 3,828 531 (437) (525) Z-Score (X) 0.0 0.0 0.0 0.0
Net Cashflow 1,760 (726) (347) 562 N. Cash/(Debt)PS (S cts) (7.4) (17.7) (17.0) (8.1)
Opg CFPS (S cts) (0.3) 5.1 7.3 9.7
Free CFPS (S cts) (17.0) (10.3) 0.7 8.9
Quarterly / Interim Income Statement (S$ m) Segmental Breakdown / Key Assumptions
FY Dec 2Q2009 3Q2009 4Q2009 1Q2010 FY Dec 2009A 2010F 2011F 2012F
Turnover 120 141 125 460 Revenues (S$ m)
Cost of Goods Sold (102) (101) (126) (279) UK 448 467 484 484
Gross Profit 18 40 (1) 181 Singapore 0 2,846 3,697 4,605
Other Oper. (Exp)/Inc (11) (11) (13) (62) Others 43 43 43 43
Operating Profit 8 29 (14) 119
Other Non Opg (Exp)/Inc 1 1 1 2
Associates & JV Inc (21) (1) 13 (1) Total 491 3,356 4,224 5,132
Net Interest (Exp)/Inc (14) (13) (12) (22) Operating profit (S$ m)
Exceptional Gain/(Loss) (24) (101) (91) (478) UK 23 4 5 5
Pre-tax Profit (48) (84) (103) (378) Singapore (130) 726 983 1,335
Tax (2) (9) 1 (18) Others 141 (25) (15) (15)
Minority Interest 0 0 0 0
Net Profit (51) (93) (102) (396)
Net profit bef Except. (27) 8 (10) 83 Total 34 705 973 1,325
EBITDA (2) 39 12 149 Operating Profit Margins (%)
UK 5.1 1.0 1.0 1.0
Sales Gth (%) 14.0 17.1 (11.2) 268.4 Singapore N/A 25.5 26.6 29.0
EBITDA Gth (%) (116.0) (1,787.8) (69.4) 1,153.1
Opg Profit Gth (%) 29.8 269.8 (149.5) (944.3)
Net Profit Gth (%) 59.0 84.3 8.9 289.7
Gross Margins (%) 15.3 28.3 (0.9) 39.3 Total 6.9 21.0 23.0 25.8
Opg Profit Margins (%) 6.4 20.3 (11.3) 25.9
Net Profit Margins (%) (42.2) (66.3) (81.4) (86.1)

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Regional Industry Focus
Singapore Gaming

Figure 10: GENT financial statements

Income Statement (RM m) Balance Sheet (RM m)
FY Dec 2009A 2010F 2011F 2012F FY Dec 2009A 2010F 2011F 2012F
Turnover 8,894 15,357 17,667 20,171 Net Fixed Assets 18,352 22,306 23,371 22,888
Cost of Goods Sold (5,580) (10,161) (11,648) (13,185) Invts in Associates & JVs 725 753 789 828
Gross Profit 3,313 5,196 6,019 6,986 Other LT Assets 7,877 7,877 7,877 7,877
Other Opng (Exp)/Inc (687) (1,146) (1,254) (1,243) Cash & ST Invts 15,004 13,802 13,935 16,579
Operating Profit 2,626 4,049 4,765 5,743 Inventory 387 508 582 659
Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 1,097 1,706 1,767 2,017
Associates & JV Inc 20 28 36 38 Other Current Assets 59 61 63 66
Net Interest (Exp)/Inc (136) (394) (372) (254) Total Assets 43,501 47,014 48,385 50,914
Exceptional Gain/(Loss) (101) 0 0 0
Pre-tax Profit 2,528 3,803 4,549 5,648 ST Debt 853 853 853 853
Tax (746) (861) (996) (1,201) Other Current Liab 2,584 3,273 3,146 3,564
Minority Interest (739) (1,320) (1,600) (1,989) LT Debt 12,659 13,084 11,185 9,075
Net Profit 1,044 1,622 1,953 2,457 Other LT Liabilities 1,693 1,456 1,669 1,909
Net Profit before Except. 1,146 1,622 1,953 2,457 Shareholder’s Equity 13,887 15,203 16,786 18,779
EBITDA 3,453 5,343 6,175 7,145 Minority Interests 11,825 13,145 14,746 16,735
Total Cap. & Liab. 43,501 47,014 48,385 50,914
Sales Gth (%) (2.1) 72.7 15.0 14.2
EBITDA Gth (%) (4.3) 54.7 15.6 15.7 Non-Cash Wkg. Capital (1,041) (998) (734) (822)
Opg Profit Gth (%) (4.6) 54.2 17.7 20.5 Net Cash/(Debt) 1,492 (134) 1,897 6,652
Net Profit Gth (%) 83.4 55.3 20.4 25.8
Effective Tax Rate (%) 29.5 22.6 21.9 21.3
Cash Flow Statement (RM m) Rates & Ratio
FY Dec 2009A 2010F 2011F 2012F FY Dec 2009A 2010F 2011F 2012F
Pre-Tax Profit 2,528 3,803 4,549 5,648 Gross Margins (%) 37.3 33.8 34.1 34.6
Dep. & Amort. 687 1,146 1,254 1,243 Opg Profit Margin (%) 29.5 26.4 27.0 28.5
Tax Paid (863) (861) (996) (1,201) Net Profit Margin (%) 11.7 10.6 11.1 12.2
Assoc. & JV Inc/(loss) (20) (28) (36) (38) ROAE (%) 7.9 11.2 12.2 13.8
Chg in Wkg.Cap. (53) (43) (264) 88 ROA (%) 2.8 3.6 4.1 4.9
Other Operating CF 273 275 252 134 ROCE (%) 5.3 7.4 8.4 9.8
Net Operating CF 2,552 4,292 4,760 5,873 Div Payout Ratio (%) 18.6 18.9 18.9 18.9
Capital Exp.(net) (5,199) (5,100) (2,320) (760) Net Interest Cover (x) 19.2 10.3 12.8 22.6
Other Invts.(net) 0 0 0 0 Asset Turnover (x) 0.2 0.3 0.4 0.4
Invts in Assoc. & JV (1,219) 0 0 0 Debtors Turn (avg days) 44.9 33.3 35.9 34.2
Div from Assoc & JV 123 223 213 241 Creditors Turn (avg days) 145.2 110.4 105.6 96.4
Other Investing CF 602 (275) (252) (134) Inventory Turn (avg days) 28.5 18.1 19.1 19.0
Net Investing CF (5,692) (5,151) (2,359) (654) Current Ratio (x) 4.8 3.9 4.1 4.4
Div Paid (504) (307) (369) (464) Quick Ratio (x) 4.7 3.8 3.9 4.2
Chg in Gross Debt 7,502 424 (1,899) (2,110) Net Debt/Equity (X) CASH 0.0 CASH CASH
Capital Issues 1,609 0 0 0 Net Debt/Equity ex MI (X) (0.1) 0.0 (0.1) (0.4)
Other Financing CF (64) (460) 0 0 Capex to Debt (%) 38.5 36.6 19.3 7.7
Net Financing CF 8,543 (343) (2,268) (2,574) Z-Score (X) 2.5 2.2 2.0 2.2
Net Cashflow 5,402 (1,202) 132 2,645 N. Cash/(Debt)PS (sen) 40.3 (3.6) 51.2 179.5
Opg CFPS (sen) 70.3 117.0 135.6 156.1
Free CFPS (sen) (71.4) (21.8) 65.8 138.0
Quarterly / Interim Income Statement (RM m) Segmental Breakdown / Key Assumptions
FY Dec 2Q2009 3Q2009 4Q2009 1Q2010 FY Dec 2009A 2010F 2011F 2012F
Turnover 2,103 2,402 2,320 3,114 Revenues (RM m)
Cost of Goods Sold (1,223) (1,452) (1,571) (1,906) Leisure 6,017 12,630 14,925 17,389
Gross Profit 880 950 749 1,208 Plantations 675 895 897 923
Other Oper. (Exp)/Inc (169) (174) (176) (216) Power 1,871 1,469 1,469 1,469
Operating Profit 710 776 574 992 Oil & Gas 143 171 179 188
Other Non Opg (Exp)/Inc 0 0 0 0 Others 187 192 197 202
Associates & JV Inc (31) 10 33 27 Total 8,894 15,357 17,667 20,171
Net Interest (Exp)/Inc (36) (25) (42) (76) Operating Profit (RM m)
Exceptional Gain/(Loss) (52) (21) 3 (800) Leisure 1,996 3,342 4,052 4,998
Pre-tax Profit 570 805 586 200 Plantations 285 349 354 384
Tax (182) (191) (190) (235) Power 363 363 363 363
Minority Interest (174) (243) (151) 267 Oil & Gas 5 16 17 18
Net Profit 214 371 245 232 Others (23) (22) (21) (19)
Net profit bef Except. 267 393 243 1,033 Total 2,626 4,049 4,765 5,743
EBITDA 828 1,025 801 1,292 Operating Margins (%)
Leisure 33.2 26.5 27.1 28.7
Sales Gth (%) 1.6 14.2 (3.4) 34.2 Plantations 42.2 39.0 39.4 41.6
EBITDA Gth (%) 3.5 23.9 (21.9) 61.4 Power 19.4 24.7 24.7 24.7
Opg Profit Gth (%) 25.5 9.3 (26.1) 73.0 Oil & Gas 3.2 9.5 9.5 9.5
Net Profit Gth (%) 0.6 73.1 (33.9) (5.3)
Gross Margins (%) 41.8 39.5 32.3 38.8 Total 29.5 26.4 27.0 28.5
Opg Profit Margins (%) 33.8 32.3 24.7 31.9
Net Profit Margins (%) 10.2 15.5 10.6 7.5

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 Regional Industry Focus
Singapore Gaming

Figure 11: MBS vs RWS

Marina Bay Sands Whats Opened? Resorts World at Sentosa Remarks
Location Marina Bay Sentosa Island
Site area (sf) 2,204,572 5,144,000
GFA (sf) 6,135,480 3,692,052
Land cost ($m) S$1.2bn $605m
Total cost ($b) US$5.25-5.5 S$6.6
Target audience MICE and lifestyle Leisure/family
Attractions

SkyPark Jun 2010 Universal Studio (24 theme Mar 2010, 18 out of 24
rides) rides
Waterfront Promenade Jun 2010 Oceanarium Marine Life Park Est 2011
ArtScience Museum Dec 2010 Equarius Water Park Est 2011
Theatres x2 (4000 pax Jun/Oct 2010 Xperimential Maritime Museum Est 2011
capacity)
Espa Wellness Sanctuary Est 2011
Disney’s Lion King Est Oct 2010 La Vie (resident show) End 2010
Retail space Shoppes at Marina Bay c50% of shops Festive Walk 0.1m sq ft Opened and
Snands, 0.8m sqft opened operational

Convention & 250 meeting rooms (45,000 26 meeting rooms (3250

Exhibition seating capacity) seating capacity)
Hotel
Hotel Rooms 2600 (3 hotels) 963 rooms opened, 1800 (6 hotels) 1,350 rooms
more in coming ( 4 hotels), Rest in
months 2H10/2011

Casino
Gaming tables VIP 70 out of 139 tables VIP 300-340 tables opened
opened of which 1/3 is VIP area

Mass Gaming 452 out of 650 tables Mass Gaming

opened

Slot machines Slot machines 1,450 slots ( out of Slot machines Est 1,200 slots out of
1,650) 1,600 slots

Source: MBS, RWS, DBS Vickers, various media sources

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Regional Industry Focus
Singapore Gaming

Figure 12: Singapore Tourism Trends

Strong growth in visitor arrivals

1000 35%
Singapore welcomed 950,000 visitors in June, +26.7% yoy.
950 YoY Growth 30%

900
YoY % Growth 25%
This represents 7 consecutive months of record arrivals since
850
20% Dec 2009.
15%
800
10%
750
5%
Total arrivals YTD amounted to 5.5m for the first 6 months of
700
0% the year, which is 22% higher compared to first 6 months to
650
-5%
2009 and 9% above the previous peak in 2008.
600 -10%
550 -15%

500 -20%
J an- F eb- Mar- Apr- May- J un- J ul- Aug- Sep- Oct- Nov- Dec- J an- Feb- Mar- Apr- May- J un-
09 09 09 09 09 09 09 09 09 09 09 09 10 10 10 10 10 10
Source: STB

Top visitor source markets YTD

USA Singapore’s top visitor markets remained relatively similar with
5%
Europe Indonesia Indonesia (19%), China (10%), Malaysia (9%), India (8%) and
13% 18%
Australia (8%) forming 54% of total visitor arrivals YTD.

China
Others
10%
14%

V ietnam
3% Malay sia
9%
HK 3%
Thailand
4% India
Philippines Australia 8%
5% 8%
Source: STB

Top growth countries YTD

Others 11% Apart from the traditional top 5 visitor arrival sources, since
V ietnam 17% the start of the year, we also saw strong visitor growth from
Hong Kong 24% countries such as Hong Kong, Thailand, Vietnam and
Thailand 28%
Philippines (growing in excess of 20% yoy and surpassing
Philippines 25%
previous peaks reported in 2008). These countries contributed
Australia 11%
to c14% of total visitors arrivals YTD when they historically
India 28%
only accounted for less than 10% of total visitor arrivals.
Malay sia 49%

China 23%

Indonesia 37%

0% 10% 20% 30% 40% 50% 60%

Source: STB

Average length of stay increasing

4.4
Average length of stay grew to 4.2 days in Jun 2010, and has
4.2 been on an uptrend since the start of the year.
4.0

3.8

3.6

3.4

3.2

3.0
Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10

Source: STB

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 Regional Industry Focus
Singapore Gaming

DBSV 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

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investment banking transaction as a manager or co-manager 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.

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Regional Industry Focus
Singapore Gaming

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