KUALA LUMPUR: Affin Hwang Capital Research retains its Buy call for Genting Malaysia with a target price of RM5 as key facilities under its Genting Integrated Tourism Plan (GITP) is on track for a soft opening by year-end.
It said on Monday the facilities are the new cable car system, Sky Avenue and Sky Plaza shopping mall and multi-storey car park.
“We like Genting Malaysia for the potential in earnings growth from additional gaming facilities and non-gaming revenue (that is, retail and theme parks).
“Our realised net asset value (RNAV) based 12-month target price of RM5 implies a 2017E price-to-earnings ratio (PER) of 17.8 times, which is comparable to forward PERs of US gaming companies and lower than that of Genting Singapore,” it said.
Affin Hwang Research said the potential catalysts for Genting Malaysia include the commissioning of the podium in 2H16 and the opening of the Fox World theme park in 2017. The risk is a delay in execution of the GITP.
The podium, which houses additional gaming capacity, should also be ready by year-end.
“We see this as a key catalyst since domestic operations account for c.80% of group earnings. The 20th Century Fox World theme park is scheduled to open by end-2017,” it said.
Affin Hwang Research was positive on the revised marketing strategies adopted in the UK, which helped to grow the premium mass segment and mitigate the on-year decline in VIP volume (2Q16: -30% vs 1Q16: -40%).
Together with a better luck factor and tighter credit control, this has led to much better results from the UK (1H16 revenue grew 59% on-year) and a more balanced split in gross gaming revenue between mass and VIP,” said the research house.
