DESPITE posting wider 4Q FY2021 and FY2021 losses than Maybank IB Research has projected, the research house maintained that it continues to like Genting Bhd as a liquid recovery play.
Attributing the weaker performance to losses from 49%-owned associate Meizhou Wan power plant on high coal prices and a RM113.2 mil deferred tax charge due to changes in tax rate in certain jurisdictions, Maybank IB Research was “positively surprised” by Genting Bhd’s interim dividend per share (DPS) of 11 sen which was 69% more than it expected.
“Going forward, Genting Bhd’s earnings recovery will be gradual especially at Genting Singapore Ltd. Thus, we cut its FY2022E/FY2023E earnings by 30%/23%,” opined analyst Yin Shao Yang in a results review.
“(We) tweak our SOP (sum-of-parts)-based target price to RM5.48 from RM5.45 as we roll forward our valuation base year to end-FY2022E from end-FY2021E.”
According to Maybank IB Research, Genting Bhd’s 4Q FY2021 core net loss of RM339 mil brought its FY2021 core net loss to RM1.18 bil which was more than double of what the research house had expected (ie RM499.9 mil).
Meanwhile, CGS-CIMB Research trimmed Genting Bhd’s FY2022F/2023F core earnings per share (EPS) by 45%/27% after factoring in Resorts World Las Vegas’ (RMLV) net losses and lower Genting Malaysia Bhd (higher finance cost for SkyWorlds) and Genting Singapore (delayed re-opening of borders) earnings.
Although this was partly offset by higher Genting Plantations Bhd’s contribution (higher crude palm oil prices and better downstream profits), the research house lowered Genting Bhd’s target price to RM6.85 (from RM7.10 previously) while retaining its “buy” rating.
This is to reflect its revised Genting Plantations (+10 sen after earnings upgrade) and Genting Singapore (+5 sen after roll-over of valuation to end-FY2022F) fair values and updated Genting Bhd’s net debt position.
“The key potential re-rating catalyst is full earnings recovery post-COVID-19,” reckoned CGS-CIMB Research. “Genting Bhd’s FY2022-2024F dividend yields are decent at 3.3-4.9% per annum. The downside risks are worse-than-expected COVID-19 and RWLV’s net losses.”
At 10.17am, Genting Bhd was up 10 sen or 2.22% to RM4.60 with 1.61 million shares traded, thus valuing the company at RM17.83 bil. – Feb 25, 2022
