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Tuesday, August 23, 2011

Gaming sector update – Who has the winning hand?

Asia’s consumer story provides the underpinning of our OVERWEIGHT stance on Malaysian gaming. Malaysia’s gaming companies are a good bet on rising incomes and may also be catalysed by i) newsflow on regional expansion and M&As, and ii) stronger overseas growth. Genting Malaysia replaces its parent Genting Bhd as our top pick. A new growth angle has emerged in the form of overseas earnings. Meanwhile, Genting Bhd offers a cheaper play on the lucrative and young Singapore gaming market than Genting Singapore. Investors who want a safer bet in these uncertain times can opt for NFO operator B-Toto which is defensive and offers solid dividends as well as good earnings potential this year, going by the good response to its new game. We upgrade it to Outperform. Our target prices for the three stocks are changed by -17% to +8%.

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