By Carey Wong
Thu, 27 May 2010, 08:42:08 SGT

Market Pulse: Genting and SMRT (27 May 2010)

FOCUS

Genting: Encouraging Tourist Arrival Numbers

Summary: Genting Singapore (GS) – which recently posted a much stronger-than-expected set of 1Q10 results – should continue to do well, buoyed by the strong influx of tourists into Singapore. According to the Singapore Tourism Board (STB), tourist arrivals jumped 20.4% YoY (+1.1% QoQ) to 938k foreigners – it is also the fifth straight month in which record monthly visitor arrivals were logged. Equally important is the strong jump in tourists from neighbouring Asian countries like Thailand (+57.5%), Malaysia (+50.8%) and India (+30.8%) while Indonesians remain Singapore’s top market with 163k arrivals, up 8%; we believe that these countries are important catchment areas for GS, especially those within a five-hour plane ride from Singapore. Based on the encouraging tourism numbers and the recent 1Q10 results, we remain upbeat about RWS’ prospects this year, and maintain our BUY rating and S$1.29 fair value. (Carey Wong)


SMRT Corporation: Time to board the train

Summary: SMRT’s share price immediately slumped by 5.7% the next trading day following its 4QFY10 results, as a hike in its operating expenses (opex) had caused the bottomline to miss market’s expectations. While we acknowledge that its 4Q results, to a certain extent, were impacted by operating costs from CCL, we believe that the sell-down due to this issue may be been overdone. Operationally, we are still keenly positive on its developments of its core business segments. Monthly statistics provided by SMRT showed that the total monthly MRT and bus ridership are still enjoying healthy growth momentum. We continue to like SMRT for its growth story in the public transport sector space, its consistently strong operating cashflows and dividend payouts. We maintain our view that the group is likely to capture a significantly higher ridership with the progressive opening of CCL stations. Together with a return of tourism, opening of integrated resorts and major events, that should bolster its performance in FY11. We are upgrading SMRT to BUY with S$2.33 fair value (maintained) as the recent weakness in its share price now presents a good opportunity to accumulate the stock. (Kevin Tan)


For more information on the above, visit www.ocbcresearch.com for the detailed report.


NEWS HEADLINES

- Parkway Holdings has requested a trading halt this morning, pending the release of an announcement.

- The Government of Singapore Investment Corp is exploring a listing in Singapore of some of its property assets through an IPO of shares that could raise up to US$1b.

- US-listed Cascal has voluntarily withdrawn its complaint against Sembcorp Industries, following the latter's legal triumph in being allowed to proceed with its voluntary tender offer for its shares.

- Pan Hong reported RMB170.7m net profit for its FY10, reversing the loss of RMB37.2m in the previous financial period.

- Boustead reported a 59% YoY drop in net profit to S$14.2m for 4QFY10, down from S$34.7m a year earlier.

- Singapore has retained its spot as the top Asian city boasting the highest quality of living by coming in 28th out of the 221 cities ranked in this year's survey by consultancy firm Mercer.

- Singapore's manufacturing output continues to power ahead, surging 51% YoY in April.

- K-REIT Asia is in talks to buy the bulk of the space in a high-profile office tower in Sydney's CBD area, according to the Australian Financial Review.

- Tiger Airways is boosting its pilot and cabin crew numbers by 20%.

- Biosensors International Group posted net earnings of US$9.1m for its 4QFY10, up from US$379k for the year-ago period.

- Global Palm Resources said that its net profit for FYE Dec 2009 stood at 145b rupiah, up from 2008's 70b rupiah.