Genting Malaysia Bhd (Nov 25, RM3.85)
Maintain hold at RM3.86 with revised fair value of RM3.88 (from RM3.83): Genting Malaysia’s 9MFY11 results were within expectations. Its most recent acquisition of Fox Poker Club Ltd for £7.8 million (RM38.6 million) is not expected to contribute materially going forward.
Core net profit for 3QFY11 of RM396 million (+23% year-on-year, +14% quarter-on-quarter) brought 9MFY11 core net profit to RM1.2 billion (+13% y-o-y), at 78% of our full-year estimate. Excluding the Resorts World New York (RWNY) construction revenue, 9MFY11 revenue of RM5 billion (+32% y-o-y) was also within expectations at 76% of our 2011 estimate. No interim dividend was declared (2Q11: 3.8 sen less tax) — as expected.
Core net profit for 3QFY11 was 23% higher y-o-y not only due to maiden contributions from Genting UK but also higher VIP volume and win rate at Resorts World Genting (RWG). Core net profit for 3QFY11 was 14% higher q-o-q largely due to normalising VIP win rate at Genting UK. Genting UK acquired Fox Poker Club Ltd for £7.8 million cash. It holds a casino premises licence and operates a poker club in central London.
RWG’s earnings are expected to be stable while Genting UK’s earnings are expected to remain volatile. We expect RWNY, which opened on Oct 28 to add RM128.2 million or 8% to 2012 group net profit.
We tweak our discounted cash flow-based target price upward by five sen or 1% to 3.88 to account for the RM250 million that Genting Malaysia invested in Pan Malaysian Pools preference shares. On re-rating catalysts, there has been no progress in the liberalisation of the Florida gaming industry and introduction of table games at RWNY yet. Until then, we maintain our “hold” call on Genting Malaysia. — Maybank IB Research, Nov 25
This article appeared in The Edge Financial Daily, November 29, 2011.
Maintain hold at RM3.86 with revised fair value of RM3.88 (from RM3.83): Genting Malaysia’s 9MFY11 results were within expectations. Its most recent acquisition of Fox Poker Club Ltd for £7.8 million (RM38.6 million) is not expected to contribute materially going forward.
Core net profit for 3QFY11 of RM396 million (+23% year-on-year, +14% quarter-on-quarter) brought 9MFY11 core net profit to RM1.2 billion (+13% y-o-y), at 78% of our full-year estimate. Excluding the Resorts World New York (RWNY) construction revenue, 9MFY11 revenue of RM5 billion (+32% y-o-y) was also within expectations at 76% of our 2011 estimate. No interim dividend was declared (2Q11: 3.8 sen less tax) — as expected.
Core net profit for 3QFY11 was 23% higher y-o-y not only due to maiden contributions from Genting UK but also higher VIP volume and win rate at Resorts World Genting (RWG). Core net profit for 3QFY11 was 14% higher q-o-q largely due to normalising VIP win rate at Genting UK. Genting UK acquired Fox Poker Club Ltd for £7.8 million cash. It holds a casino premises licence and operates a poker club in central London.
RWG’s earnings are expected to be stable while Genting UK’s earnings are expected to remain volatile. We expect RWNY, which opened on Oct 28 to add RM128.2 million or 8% to 2012 group net profit.
We tweak our discounted cash flow-based target price upward by five sen or 1% to 3.88 to account for the RM250 million that Genting Malaysia invested in Pan Malaysian Pools preference shares. On re-rating catalysts, there has been no progress in the liberalisation of the Florida gaming industry and introduction of table games at RWNY yet. Until then, we maintain our “hold” call on Genting Malaysia. — Maybank IB Research, Nov 25
This article appeared in The Edge Financial Daily, November 29, 2011.
