Kenanga expects earnings cut post Genting's earnings release

  • Analyst Reports
  • Friday, 07 Aug 2020

KUALA LUMPUR: Kenanga Investment Bank Research is keeping its "outperform" recommendation on Genting Bhd despite a weak earnings quarter for its subsidiary Genting Singapore Ltd.

The research house is also keeping its RM6 price target on Genting on unchanged earnings estimates pending the release of its 2QFY20 results later this month.

"Given the virus disruption to the tourism industry, we expect substantial earnings cut in the coming weeks post Genting's earnings release," it said.

Genting Singapore reported a core loss of S$116.5mil in 2QFY20, which brought 1HFY20 to a core loss of S$63.3mil.

According to Kenanga, this is likely within the consensus full-year estimate of S$200,000 core profit given the restarting of operations in July.

However, the casino remains operating at 50% of gaming capacity owing to stringent safety requirements and is only open to members.

Similarly, the theme park attractions also saw declining valuations and are not breaking even at this stage. Genting Singapore has mentioned 20% to 30% opex cost cutting so far.

"Overall, management remains pessimistic in the near term given the virus outbreak that has restricted cross border travelling," said Kenanga.
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