RHB lowers forecasts on Genting, coronavirus to weigh in 1Q20


The view from the cable car leading to Genting

KUALA LUMPUR: RHB research has cut forecasts for Genting Bhd as it expects disappointing fourth quarter earnings for Genting Malaysia Bhd while the Wuhan coronavirus outbreak could have a negative effect in subsequent quarters.

The research house expects Genting Malaysia to miss expectations in the final quarter of FY19 due to weaker-than-estimated visitor arrivals during the period with the MIER Consumer Sentiment Index falling to its lowest level in 2Q17.

Meanwhile, it also expects to see downside to its forecast share of loss from Empire Resorts of RM38mil in 4Q19 due to a possible one-off staff severance cost following the integration of the Genting Malaysia New York team.

"We believe GENT’s FY19 EBITDA could range between MYR7.5bn and MYR7.8bn," it said.

RHB cut FY19-21F earnings by 1.6%, 4% and 0.3% after factoring in Genting Malaysia's earnings revision.

It maintained its buy call on Genting but lowered the target price to RM8.60 from RM8.70 previously.

Moving forward, the Wuhan coronavirus will also slow earnings in 2020 as Resort World Genting has cancelled all tour bookings from China for February.

The first quarter of 2020 at the least will be affected.

Resorts World Sentosa will see lower footfall with Singapore barring all Chinese visitors and foreigners with a recent history to China.

Chinese form the largest group of visitors in Singapore at about 18%.

However, RHB expects visitor arrivals to recover once the outbreak stabilises.

"At the peak of the SARS outbreak, GENT’s 2Q03 PBT for the leisure & hospitality segment declined 26% YoY.

"However, it posted strong 2H earnings as FY03 only declined 5%. Share price recovered within 1-2 months after posting a decline of 17% in Feb-Apr 2003," it said.
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
   

Did you find this article insightful?

Yes
No

75% readers found this article insightful

Next In Business News

US says Vietnam's currency actions 'unreasonable' but holds off on tariffs
Top Glove reports Covid-19 outbreak at four factories
AmBank provides 6-month moratorium for flood victims
Principal Asset launches Next-G connectivity fund
CPO futures to trend lower on profit taking next week
WhatsApp to delay launch of update business features
US National Rifle Association files for bankruptcy
Oil drops over 2% on China lockdowns, U.S. stimulus concerns
Dollar finishes week stronger as US data hurts risk appetite
GLOBAL MARKETS-Data, lockdowns weigh on stocks

Stories You'll Enjoy