Genting Malaysia price rebound unlikely to continue in 4Q

KUALA LUMPUR: Kenanga Research expects the recent strong price rebound to have priced in the earnings recovery and is unlikely to continue in the final quarter of the year.

The research house, which downgraded the stock to "market perform", said 9MFY20 was disappointing as the core loss of RM1.28bil in the period was higher than its and consensus full-year estimate of RM740.6mil and RM824.3mil.

However, 3Q was a good quarter with solid numbers from Resorts World Genting, which only posted a 21% decline in adjusted Ebitda thanks largely to the mid-to-premium segment where business volume was realtively at the same levels as in the previous year.

"In our opinion, 4QFY20 is unlikely to be a strong quarter despite being a year-end season given the new CMCO in Malaysia currently and the re-imposition of lock down in UK as well as resurgence of Covid cases in the North America," it said.

Kenanga believes 2021 will be a recovery year before a full recovery in 2022.

"Post-3QFY20, we widened our FY20 net loss to RM1.36b from RM740.6m after adjusting for a stronger RWG earnings but imputing more losses for the UK and North America operations.

"We also cut FY21 estimates by 9% for the same basis as FY20," it said.

It revised lower the target price to RM2.60 from RM2.75 previously post earnings revision based on an unchanged 10% discount to its sum-of-parts valuation.
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