- Maintain BUY on Genting Malaysia Bhd (GenM), with an unchanged RNAV-based fair value of RM4.30/share.

- GenM’s 1QFY13 core earnings were in-line with our expectations and consensus estimates. In spite of the lower EBITDA recorded by the Malaysia and UK units, the group’s results were within our forecast due to a strong performance from “Resorts World New York” (RWNY) and a positive tax expense.

- Like Genting Plantations (GenP), GenM’s Malaysia division registered an expense relating to “social responsibility efforts” in 1QFY13. However in GenM’s case, the amount was not disclosed. We estimate the amount of donation at RM85mil to RM90mil assuming that the unit’s EBITDA margin in 1QFY13 would have been the same as FY12 if not for the expense.

- In Malaysia, the leisure and hospitality division recorded a double-digit percentage YoY increase in VIP casino revenue in 1QFY13.

- This was underpinned by a single-digit percentage improvement in the volume of business and higher wins percentage. As a result, VIP accounted for 37% of gaming revenue in 1QFY13 versus 34% in 1QFY12.

- EBITDA of GenM’s unit in UK fell 29.9% YoY to RM24.1mil in 1QFY13 dragged by falls in the volume of business and win percentage in the casinos in London. Revenue of the casinos in London declined 49% YoY in 1QFY13.

- The weak performance in the London casinos could not be offset by the provincial casinos, which chalked up a 15% YoY expansion in revenue in 1QFY13. The provincial casinos enjoyed higher volume of business and attendances.

- RWNY recorded an EBITDA of RM80.8mil in 1QFY13, which was 63.2% higher than the adjusted number of RM49.5mil achieved in 1QFY12. RWNY chalked up an average win of US$415/day in 1QFY13 versus US$359/day in 1QFY12.

- The increase in the average daily win was driven by a higher proportion of electronic gaming machines versus slots.

- RWNY also recorded a 13% increase in the number of visitors in 1QFY13. About 3.1mil people visited RWNY in 1QFY13. Going forward, RWNY would be intensifying its bus programme to attract more visitors from areas beyond Queens, which is where the racino is located.

Source: AmeSecurities