- We maintain Hold on Genting Bhd with a lower fair value of RM10.80/share. This is to account for Genting Plantations’ new target price of RM10.45/share versus RM11.35/share previously.

- Genting Bhd’s annualised 9MFY13 core net profit was in line with our forecast as a lower effective tax rate helped compensate for Genting Singapore’s (GenS) weak results. Against consensus, Genting Bhd’s results fell short of expectations.

- Genting Bhd’s effective tax rate was 18.7% in 9MFY13 against 24.4% in 9MFY12. Recall that GenS’ core net profit contracted by 6.3% YoY to S$374.2mil in 9MFY13 dragged by impairments for trade receivables.

- GenS was Genting Bhd’s key earnings generator, accounting for 51.9% of its 9MFY13 EBITDA. This was followed by the operations in Malaysia (40.3%), UK (3.1%) and US (4.7%).

- EBITDA of the power division surged by 49.9% YoY to RM230.2mil in 9MFY13 underpinned by lower coal prices in China. The power division also recognised construction revenue from the development of the Banten Power Plant in West Java.

- The Banten Power Plant is a 660MW coal-fired power plant, which is expected to be completed in FY16F.

- We understand that Genting Group’s management has no details on the recent legislation in New York, which would allow the setting up of four casinos in the state.

- We gather that there would be no impact on Genting Malaysia’s “Resorts World New York” in the short term as it would take time for the casinos to be built. In addition, the casinos would be located in upstate New York and not New York City.

- Also, Genting Group is finalising renovation plans on the theme park and extension of First World Hotel in Malaysia. The group will make an announcement in due course. The theme park is expected to be completed by end-FY15F or early-FY16F.

Source: AmeSecurities