WITH little optimism on the return of foreign tourists to Malaysia come 1H CY2021 as the COVID-19 pandemic has seen a global spike in terms of infection, TA Securities Research has trimmed Genting Bhd’s FY2021-2022 earnings by 14.6% and 2.6% respectively.
On the near-term, however, the research house has reduced Genting’s FY2020 loss forecast to RM347 mil after factoring in higher contribution from the group’s plantation division and higher-than-expected earnings from Genting Singapore Ltd.
According to the research house, Genting posted a core loss of RM128.2 mil for its 9M FY2020 compared to its full-year loss projections of RM372 mil and consensus forecast of RM552 mil loss.
“We deem the results to be within our expectations but above consensus estimates as 4Q FY2020 earnings is expected to return to loss due to the implementation of the conditional movement control order in Malaysia,” projected analyst Tan Kam Meng in a results review.
On the company’s broader outlook, Tan noted that Genting has no plan to delay the opening of its Resorts World Las Vegas (RMLV) which is scheduled to open in summer 2021. The group has spent a total of US$2.7 bil thus far for the US$4.3 bil project.
“As far as funding is concerned, the group has already secured the entire project financing for this project,” the analyst pointed out.
All-in, TA Securities Research maintained its “buy” rating on Genting with a higher sums-of-parts valuation to RRM5.02/share (from RM4.89 previously) in accordance with its change to Genting Malaysia Bhd’s fair value to RM3.20 from RM2.93.
Meanwhile, Hong Leong Investment Bank (HLIB) Research sees the gaming business as “remains challenging in the near-term” despite its reopening in most places largely due to the limited operating capacity alongside fear of COVID-19 widespread.
“Nonetheless, we note that Genting Singapore has actually been receiving a good response from its local visitors and should continue to do so in FY2021 with the outbreak being very much contained in the country,” noted analyst Andrew Lim Ken-Wern.
“We remain hopeful on the long-term prospects which will be supported by the opening of RWLV in 2021, opening of Genting Malaysia Bhd’s outdoor theme park in 2021, and Genting Singapore’ potential exposure in Japan (subject to winning the integrated resort bid).”
Nevertheless, HLIB Research downgraded Genting to a “hold” rating (from “buy” previously) but with a slightly higher target price of RM4.29 (from RM4.26 previously).
“Since its share price has risen 42% since Nov 9, we believe the risk and reward are fairly balanced at this juncture,” added the research house. – Nov 27, 2020
