Affin Hwang maintains 'Buy' on Genting, cuts TP to RM7.25

Affin Hwang maintains 'Buy' on Genting, cuts TP to RM7.25

The Star Online - Business·2019-11-29 09:13

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's 9M19 earnings exceeding expectations, Affin Hwang Capital research remains cautious over the near-term prospects of the group owing to the ongoing trade tensions and weak consumer sentiment. It added that Genting Singapore provides credits to its VIP clients, which could increase the risk of write-off in the event of an all-out trade war. Meanwhile, new casinos opening in the region are also increasing the competition for VIP clients. The research house reaffirmed its buy call on the stock but lowered the target price to RM7.25 from RM9 previously as it updated its valuation on Genting's subsidiaries. For its recently announced earnings, Genting's 9M19 core-PATMI of RM1.81bil exceeded Affin Hwang's and market expectations, coming in at 81% and 79% of full-year estimates respectively. "We believe that the better-than-expected performance was driven by the strong results from Genting Malaysia, which had benefited from the high hold percentage from its VIP segment," it said. The research house also noted that Genting's management is guiding for Phase 1 of Resort World Last Vegas to be open by mid-2021 despite the new amenities announced for the project. With the new amenities, the total project cost has risen to US$4.3bil from US$4bil previously, with US$1.7bil incurred since securing the project. "Despite the increase in capex, management has indicated that that current funding is sufficient to cover the additional capex for the project," Affin Hwang said.


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