Maybank Kim Eng analyst Yin Shao Yang has downgraded Genting Singapore to “hold” from “buy” following the win of an anti-IR mayor in Yokohama.
“This almost certainly means that the Yokohama IR RFP process will be shelved,” writes Yin in his Aug 23 note.
He holds firm to his view that Genting’s joint bid is in the “strongest position” to win the license, although with the results of the mayoral election, “it is likely all academic now”.
See also: Genting Singapore's swing into the black gives it strong 'buy' calls from analysts
Yin has removed his previously ascribed 30 cents per share contribution from the Yokohama IR project and his new target price is 86 cents, down from $1.16 previously.
Citing exit polls, Takeharu Yamanaka won the Yokohama mayoral election held on Aug 22.
Yamanaka, a former professor at Yokohama City University, took an anti-IR stance even before campaigning, describing casinos as ‘poison apples’, and has reportedly said he is “completely opposed” to an IR bid.
In contrast, the incumbent mayor standing for re-election is pro-IR.
“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,” notes Yin.
Genting Singapore shares closed on Friday, Aug 20, at 81 cents.
