PETALING JAYA: Phillip Research has revised downward its headline earnings forecasts for Genting Malaysia Bhd
for the next few years, accounting for costs associated with a stronger ringgit.
In a report to clients, the brokerage noted a 1% reduction in its earnings target for 2024 and a 9% cut for the 2025–2026 forecasts.
However, the research house still advocates investors to accumulate the stock on price weakness, highlighting that the group is still trading at an undemanding 6.6 times the 2025 enterprise multiple (enterprise value over earnings before interest, tax, depreciation and amortisation), with a 7% dividend yield.
The report also highlighted that the sharp appreciation of the ringgit against regional currencies in the past three months may hinder foreign visitation, which account for around 20% of hilltop arrivals in the second quarter of 2024 (2Q24).
While tourist arrivals from China more than doubled year-on-year in 2Q24, they remain 38% below the pre-lockdown levels, Phillip Research said.
“The shortfall was cushioned by stronger-than-expected visitations from Singapore and Indonesia, collectively driving a 15% rise in foreign visitors in 2Q24.
“Foreign arrivals remained robust in July and August, reaching around 96% of pre-lockdown levels, suggesting visitations to the hilltop could be sequentially stronger in 3Q24.”
The brokerage maintains its visitation assumptions at this time, as it believes the tourism recovery remains intact.
The research house maintains its “buy” call on the stock, with a target price to RM3.30 per share.
