Equanimity could appeal to GenM's VIP customers, says RHB

KUALA LUMPUR: Genting Malaysia Bhd 's acquisition of the Equanimity superyacht for US$126mil (RM514.6mil) could improve the branding and VIP gaming volume of the gaming and leisure company. 

In a research note, RHB research said it believes the facilities on the Equanimity will appeal to VIP customers on top of Genting Malaysia's existing luxurious offerings, which include five-star hotels, private jets and helicopters.

"The purchase of Equanimity will enable GENM to differentiate itself from competitors with a unique edge for its high-roller gaming business. 

"The reported initial amount paid to purchase the yacht was USD250m, which has a marble interior, a spa and sauna, a 20m swimming pool, a movie theatre and a helipad," it said.

In addition, RHB believes that the government would be appreciative of the purchase sum offered by Genting Malaysia, as it was more than what the former had expected and resulted in estimated savings of US$4.4mil.

RHB also believes that Genting Malaysia's maintanence cost would be lower than that incurred by the government given its expertise in luxury cruise operations. 

The government was reported to have spent RM14.5mil to maintain the ship since reclaiming it in August 2018.

"Based on the purchase value, the amount is small (1.5%) relative to GENM’s FY18 total assets of MYR33.0bn. 

"Assuming a quarterly maintenance cost of MYR5-6m, we believe this is manageable, in view of the company’s FY18 operating cash flow of MYR2.8bn," said RHB.

The research house trimmed its FY19-21F earnings per share by 3% to take into account higher depreciation expenses and maintanence costs for Equanimity and update the annual audited accounts.

It maintained its buy call on the counter with a lower target price of RM3.90 from RM3.98 previously. 

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