AmWatch - Genting Malaysia : Malaysia hit by low win % and higher VIP costs BUY

STOCK FOCUS OF THE DAY

Genting Malaysia : Malaysia hit by low win % and higher VIP costs            BUY

Although Genting Malaysia Bhd’s (GenM) 9MFY14 results were below our expectations and consensus estimates, we are keeping our BUY recommendation on the group. GenM’s net profit growth is expected to resume in FY15F on the back of capacity expansion. This would be underpinned by the opening of 500 hotel rooms at Resorts World Genting at end-FY14F and 800 rooms by mid-FY15F.

We have reduced GenM’s FY14F EPS by 6.4% to account for lower contribution from Resorts World Genting and Resorts World New York (RWNY). Our fair value for GenM has been adjusted downwards from RM5.10/share to RM4.90/share to reflect the earnings revision. After a poor 2QFY14, GenM’s core net profit rebounded by 10.4% QoQ to RM280.9mil in 3QFY14. This was mainly driven by the UK unit, which swung from a negative EBITDA of RM65.9mil in 2QFY14 to a positive number of RM145.6mil in 3QFY14. The UK division’s win percentage improved QoQ in 3QFY14. Also, there was an increase in the volume of business at the provincial casinos. Attendances at the UK casinos improved by 2% in 3QFY14 versus 3QFY13. Comparing 9MFY14 against 9MFY13, casino attendances were flat.

Others :

Genting Bhd : Let down by GenS and GenM        HOLD

Economic Update : Inflation rate registers a growth of 2.8% in October(CPI)

Economic Update : International reserves fall to USD126.6bil as at mid-November(BNM)

Economic Update : Manage float mechanism for petrol pump prices effective 1 December 2014(Fuel)

QUICK TAKE

Plantaions Sector : Newsflow for week 17-21 November               Neutral

NEWS HIGHLIGHTS

IOI properties : Plans to expand IOI City Mall in Putrajaya

UMW Oil & Gas Corporation : Eyes M&As

Media Sector : Adex seen flat ahead as advertisers cautious until GST implementation

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