KUALA LUMPUR: Genting Malaysia Bhd sees potential earnings growth as its key facilities under its Genting Integrated Tourism Plan (GITP) is on track for a soft opening by year-end. Affin Hwang Capital Research retained a “buy” call for Genting Malaysia with a target price of RM5.
“We understand from management that the opening of new key facilities such as new cable car system, Sky Avenue and Sky Plaza shopping mall, and multi-storey car park with regard to GITP is on track for a soft opening by year-end. “The podium, which houses additional gaming capacity, should also be ready by year-end.
“We see this as a key catalyst since domestic operations account for around 80% of group earnings,” said the research house in a report yesterday.
Affin Hwang said its realised net asset value (RNAV) based 12-month target price of RM5 implies a 2017E price-to-earnings ratio (PER) of 17.8 times, which is comparable to forward PERs of US gaming companies and lower than that of Genting Singapore.
Besides Malaysia, Genting has 43 casinos in the UK, including Resorts World Birmingham, which started operation in October last year.
“We are positive on the revised marketing strategies adopted in the UK, which we believe have helped to grow the premium mass segment and mitigate the decline in VIP volume.
“Together with a better luck factor and tighter credit control, this has led to much better results from the UK as its first half of 2016’s revenue grew 59% year-on-year and a more balanced split in gross gaming revenue between mass and VIP,” said Affin Hwang.
As of the US, Affin Hwang expected losses to narrow at Bimini with room capacity and without the costly in-house ferry operations. “Management is still negotiating with third party ferry providers, and expects to start new services soon.
“In the longer term, we see upside in the US operations from the proposed US$400mil expansion of New York Racino that includes an expansion of 1,000 slot machines by April 2019.
