TURNING positive on the long-term prospects of Genting Bhd, Hong Leong Investment Bank (HLIB) Research has adjusted upward the casino operator’s target price by a staggering 32% to RM6 (from RM4.54 previously).
The research house further upgraded Genting which it envisaged to post an exponential year-on-year (yoy) profit growth in FY2022 to a “buy” from “hold” previously.
“However, we believe that (Genting’s) FY2021 performance will be weaker than expected due to the inter-state travel bans imposed in Malaysia lasting longer than expected,” projected analyst Low Jin Wu in a company update.
“Nevertheless, we believe that investors would start to look beyond FY2021 due to the timeline of vaccine roll-outs despite rising COVID-19 cases of late.”
Moving forward, HLIB Research is also of the view that the development of Resorts World Las Vegas (RWLV) will augur well for Genting’s long-term prospects.
RWLV is currently hiring employees and filling in its restaurant and shopping spaces as it prepares to open on June 24.
“We believe that RWLV is expected to go through a slow start from its official opening date to mid-FY2022 before picking up more in FY2023,” noted the research house.
“We opine that things would be near pre-COVID-19 normalcy in FY2023 as the entire population of the US is expected to be vaccinated by the end of 1H 2022. We expect RWLV to contribute 4/6% of EBITDA in FY2022/2023.”
Through a partnership with Hilton, RWLV will offer 3,500 guestrooms and suites from three premium Hilton brands, the largest multi-brand deal in Hilton’s history.
Recall that the US$4.3 bil resort is located on the west side strip near Circus Circus and Slots-A-Fun, 5km away from the Las Vegas convention centre.
On the dividend front, HLIB Research expects yields to continue in FY2021 despite its expectations on a slower recovery.
“We view that Genting will continue to dish out a flat yoy dividend per share of 22sen (yield: 4.4%) as we expect a strong recovery in FY2022.
At 10.12am, Genting was down 5 sen or 1.01% to RM4.90 with 1.01 million shares traded, thus valuing the company at RM18.98 mil. – April 27, 2021
