Investment Highlights

• We are keeping our HOLD recommendation on Genting Bhd with an increased RNAV-based fair value of RM9.60/share. We have raised Genting Bhd’s fair value to account for our higher fair value for Genting Malaysia (GenM) of RM5.45/share (vs. RM4.95/share previously).

• Genting Bhd's 1QFY18 results were above our expectations but within consensus estimates. Genting Bhd’s earnings surpassed our forecast due to strongerthan-expected contribution from Genting Singapore (GenS) and GenM. However as we did not revise our earnings forecasts for the two subsidiaries, we are leaving our earnings estimates unchanged for Genting Bhd.

• Genting Bhd's core EBITDA rose by 16.7% from RM1.9bil in 1QFY17 to RM2.2bil in 1QFY18 on the back of an 18% climb in the earnings of GenM and 20.7% expansion in GenS’ profits.

• The Singapore unit accounted for 58.2% of Genting Bhd's leisure and hospitality EBITDA in 1QFY18 while the Malaysia division accounted for another 36.7%. The UK and US made up the balance 5.1% of Genting Bhd's leisure and hospitality EBITDA in 1QFY18.

• We understand that the construction of Resorts World Las Vegas is progressing smoothly. The main tower is being completed at a rate of one floor per week. The tower is expected to reach 57 floors soon as currently, construction works have reached the 16th floor. Resorts World Las Vegas is scheduled to open in year 2020F.

• We gather that GenM is expected to benefit from the zerorated GST (goods and services tax) in Malaysia in June 2018. This means that GenM would not have to pay GST anymore. However if the GST is replaced by the SST (sales and service tax), there would be no impact. According to press reports, the Malaysian government may impose an SST of 10% by this year. We have not accounted for the impact from the abolishment of the GST or imposition of the SST in GenM’s earnings forecast.

• There is no material update on GenM’s Massachusetts casino case. The Mashpee tribe, which is supposed to develop the casino, is looking at ways to be recognised by the American authorities. This includes submitting legislative amendments to the authorities. To recap, GenM has not recorded any impairment on its US$368mil investment on the promissory notes issued by the tribe to develop the casino.

Source: AmInvest Research - 25 May 2018