Maybank Kim Eng downgraded Genting Singapore form “Buy” to “Hold” and lowered its target price by 26% on Monday following the news that anti-IR campaigner Takeharu Yamanaka had won the Yokohama mayoral election.
Yamanaka was among the most vocal of Yokohama’s eight candidates in his opposition of IRs, describing casinos as a “poison apple” and promising to immediately end the city’s IR bid should he be voted in as new mayor.
That scenario now looks unavoidable after the 48-year-old claimed 33.59% of the vote to finish well clear of Hachiro Okonogi with 21.62% and incumbent Fumiko Hayashi with 13.06%.
On Monday, Maybank’s Samuel Yin Shao Yang removed his previously ascribed SG$0.30 per share contribution to the company’s target price from a Yokohama IR, lowering the target price from SG$1.16 to SG$0.86. He also downgraded the shares from “Buy” to “Hold”, although The Straits Times reported shares were heavily traded in response to the news from Yokohama.
As one of only two remaining candidates to develop a Yokohama IR alongside Melco Resorts & Entertainment, Genting Singapore’s consortium had been considered favorite to win an IR license had the city’s bid gone ahead.
“Though we still opine that the Genting Singapore-Sega Sammy joint venture was in the strongest position to win a Yokohama IR license, it is likely all academic now,” Yin said Monday.
“In any case, our previous recommendation on Genting Singapore was as a tactical ‘Buy’. In our view, there was little downside risk as we gather that the market had not imputed any upside potential from a Yokohama IR.
“With the Yokohama mayoral election having come and gone, we downgrade Genting Singapore to ‘Hold’.
Nomura Research has maintained its “Buy” rating for Genting Singapore, noting that it had not yet factored in a SG$0.14 to SG$0.34 upside to the target price from a potential Yokohama IR.
“We reiterate our ‘Buy’ rating on Genting Singapore as a play on a gradual tourism recovery as Singapore transitions to a new normal, with a more progressive border reopening,” said analysts Tushar Mohata and Alpa Aggarwal.