Genting, Genting Malaysia shares down in early trade

KUALA LUMPUR: Genting Bhd and Genting Malaysia Bhd shares fell in active trading on Thursday following their latest corporate news.

Genting, the third losers on Bursa Malaysia shed 16 sen, or 2.3% to RM6.79 with 1.76 million shares traded. Genting Malaysia fell three sen, or 0.91% to RM3.25 with over one million shares done.

Genting’s indirect wholly-owned subsidiaries, Resorts World Las Vegas LLC and RWLV Capital Inc, have priced their offering of US$1bil bonds with a 4.625% coupon rate.

Separately, Genting Malaysia has confirmed its acquisition of the Equanimity superyacht for US$126mil (RM514.6mil) under a Judicial Sale process, by way of private direct sale.

The gaming company said on March 28, it made an offer to the Kuala Lumpur High Court of Malaya to purchase the superyacht together with bunkers, fuel, lubricants and other existing consumables on board under a Judicial Sale process, by way of private direct sale, pursuant to the order made by the Kuala Lumpur High Court of Malaya under its Admiralty jurisdiction.

CGS-CIMB Research said the acquisition was a “negative surprise” and expects its net gearing to rise slightly after purchaseof Equanimity.

Genting Malaysia said the acquisition of Equanimity will allow the group to differentiate itself from its competitors and provides a unique and competitive edge for its premium customer business.

“We view this news negatively as Genting Malaysia does not have experience managing superyacht and cruise liners. The group’s cruise liner business is managed by Genting Hong Kong, which we understand is owned by the private arm of the Genting Group,” CGS-CIMB said.

The research house said as at end Dec-18, Genting Malaysia had RM1.77bil net debt or 0.1x net gearing.

It added that buying the Equanimity has minimal impact on Genting Malaysia’s balance sheet as net debt would rise to RM2.28bil or 0.12 times net gearing

“Assuming the worst-case scenario whereby the Equanimity does not generate any revenue contribution over the next few years, we estimate Genting MalaysiaFY19-21F EPS could fall by 3.4-5.0%.

“However, we maintain our EPS forecasts for now until we have clarification of Genting Malaysia’s future business plans for Equanimity,” CGS-CIMB said, adding that it has maintained its hold call on Genting Malaysia with an unchanged target price of RM3.25.

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