Genting Bhd : RWLV to cost RM11bil BUY

STOCK FOCUS OF THE DAY

Genting Bhd : RWLV to cost RM11bil       BUY

We are maintaining our BUY recommendation on Genting Bhd, with an unchanged RNAV-based fair value of RM9.86/share. Included in Genting Bhd's RNAV are mainly our target prices of RM10.83/share for Genting Plantations (GenP), RM5.40/share for Genting Malaysia (GenM) and S$0.96/share for Genting Singapore (GenS). GenM accounts for about 36% of Genting Bhd's RNAV while GenS accounts for an additional 42%. The other assets such as GenP, power and Resorts World Las Vegas account for the balance 22% of Genting Bhd's RNAV. Genting Bhd’s 9MFY16 results were below consensus estimates but within our expectations. We have raised Genting Bhd's FY16F net profit by 2.1% to account for GenP's strong earnings in 3QFY16.

The first phase of Resorts World Las Vegas (RWLV) is expected to cost RM11bil or US$2.8bil. We are not certain of the exchange rate used on the conversion of the amount. The capex is expected to be spread out over two and a half to three years. We understand that about 60% of RWLV would be funded by borrowings. RWLV is being developed based on an Asian theme. In spite of this, RWLV is also targeting the local population as there is a huge MICE market in Las Vegas. The Las Vegas Convention Centre is currently being developed opposite the site of RWLV.   In Malaysia, GenM will be carrying out a soft opening of the new retail and food and beverage outlets at Resorts World Genting by the end of FY16F. The theme park is expected to open at end-FY17F. Also, GenM's effective tax rate is envisaged to remain low going forward. As the facilities at Resorts World Genting progressively open, GenM would be able to claim tax relief for the capex it has incurred. This means that GenM would be able to claim tax relief until the RM10.4bil capex at Resorts World Genting is completed.

Others :

Axiata Group : Stronger normalised earnings from NCELL boost BUY

DRB-Hicom : Proton Ertiga MPV enters the fray BUY

Genting Malaysia : Boosted by tax relief for capex in Malaysia    BUY

Hock Seng Lee : 9MFY16 Earnings Fall 18% YoY    BUY

IHH Healthcare : 3Q16 - Earnings rebound             HOLD

Magnum : Weak ticket sales       HOLD

Malayan Banking : Lower GIL ratio and credit cost in 3QFY16        HOLD

Malaysia Bulding Society : Earnings continue to be dampened by provisions         HOLD

Sarawak Cable : 3Q16 - Margin gain          HOLD

ECONOMIC HIGHLIGHTS

Singapore : 30% chance of falling into recession

NEWS HIGHLIGHTS

AirAsia : To sell leasing arm early next year

R&D Sector : JHM Q3 earnings jump over 300% on surge in car lighting demand