Genting helped the FBM KLCI close higher on Friday.
KUALA LUMPUR: Genting Bhd
and Genting Malaysia Bhd put up a contrasting performance in their share prices on Tuesday after their mixed earnings for the first quarter ended March 31, 2017.
At 11.35am, Genting Bhd was up 15 sen to RM9.88 with 433,700 shares done, but off the intra-morning high of RM9.91.
Genting Malaysia fell 31 sen to a week-low of RM5.80 with 8.46 million shares done.
Hong Leong Investment (HLIB) Research said Genting Bhd reported 1Q17 core earnings of RM573mil (+38.8% on-year), accounting 24.3% and 26.6% of the research house and consensus estimates, respectively.
Quarter-on-quarter, the core profit after tax and minority interest was down by 20.0% due to effective higher tax rate after adjusted for exceptional items. Year-on-year, bottom-line was up by 38.8% riding on the strong showings from most segments (except Malaysia and UK operations) with improved margins.
HLIB Research said the Malaysia operation was lower due to higher costs and lower volume while Gen Singapore recorded improved margin despite lower volume. Operation in US was buoyed by growth at Resort World New York (RWNY) while UK was affected by weaker pound sterling.
“Moving forward, we should expect more earnings derived from the Banten Power Plant, which started its operation since March.
“Maintain Buy as we believe Genting is the cheaper proxy (more than 30% holding discount) to buy into Gen Malaysia’s Genting Integrated Tourism Plan (GITP) growth and the excitement in Japan of Gen Singapore.
"Target price is raised to RM11.63 (from RM10.75) based on our sum-of-parts derived valuation after incorporating latest target price from its subsidiaries,” said HLIB Research.
As for Genting Malaysia, its 1Q17 core earnings were below CIMB Equities Research and market’s expectations.
The research house said the group’s softer performance was mainly due to the weaker showing from its UK business, which experienced lower hold percentage and unfavourable forex.
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