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

- GenM’s 1HFY13 core earnings were within our expectations and consensus estimates.

- Revenue of the leisure and hospitality division in Malaysia inched up by 3.6% YoY to RM2.8bil in 1HFY13 underpinned by increases in business volume and win percentage in the VIP segment.

- However, EBITDA of the leisure and hospitality division in Malaysia fell by 7% YoY to RM950.7mil in 1HFY13 due to higher promotional and donation expenses.

- We understand that volume of VIP business in Malaysiarose by a double-digit percentage YoY in 1HFY13. VIPs accounted for 40% of gaming revenue in 1HFY13 versus 36% in 1HFY12.

- In the UK, EBITDA fell by 41.1% YoY to RM97mil in 1HFY13 due to a lower win percentage and provision for bad debts. We gather that the UK division recorded a bad debts provision of RM50mil (12mil pounds) in 2QFY13.

- Resorts World New York (RWNY) continued to perform well, recording an EBITDA of RM165.9mil in 1HFY13 compared with RM110mil in 1HFY12 (excluding construction cost overruns of RM48.2mil).

- Average win was US$430/day in 1HFY13 versus US$367/day in 1QFY12. On the back of higher wins, RWNY’s EBITDA margin was 13.7% in 1HFY13 compared with an estimated 8%-10% margin in 1HFY12.

- We understand that GenM has torn down its Miami Herald building in Miami. The group has received a development permit for a mixed property development project. Unfortunately, management could not provide details on the cost and components of the project.

- We also gather that it is still too early to assess the profitability of “Resorts World Bimini”. However, we understand that the island has received more visitors partly due to the cruise provided by “Resorts World Bimini”. GenM’s capex at Bimini Island including the construction of a new hotel is estimated at US$150mil.

Source: AmeSecurities