-  Maintain HOLD on Genting Bhd with an unchanged fair value of RM10.80/share. Genting Bhd is currently trading at a fully-diluted FY14F PE of 22.3x.

-  About 43% of Genting Bhd’s RNAV comes from Genting Singapore (GenS) while Genting Malaysia (GenM) accounts for another 25%. Genting Plantations (GenP) accounts for an additional 9% of Genting Bhd’s RNAV.

-  Genting Bhd’s FY13 core net profit was below consensus estimates but within our forecast.

-  The group’s leisure and hospitality EBITDA declined by 7.8% to RM5.8bil in FY13 due to contractions in GenS’ and GenM’s earnings contributions. Recall that GenS was affected by an increase in impairment for trade receivables and a lower win percentage in the VIP segment.

-  GenS accounted for 50.6% of Genting Bhd’s FY13 leisure and hospitality EBITDA, followed by the business units in Malaysia (42.2%), UK (4%) and US (3.2%).

-  Power earnings shrank by 29.4% YoY to RM35.7mil in FY13 due to lower generation by the Jangi Wind Farm in India. Contribution from Meizhouwan Power Plant in China has been classified as profits from discontinued operations as it will be sold off soon.

-  In the US, we understand that “Resorts World Las Vegas” (RWLV) is going through a licensing process, which would take 12 to 18 months. Hence, Genting Bhd would not be commencing construction of RWLV anytime soon.

-  We think that there is a possibility that Genting Bhd might bid for a casino licence in Brisbane, Queensland. Alternatively, Genting Bhd could be leveraging on Echo Entertainment, which has said that it would be transforming its existing casino in Brisbane into an integrated resort.

-  The Queensland Government has said that it would be seeking for an expression of interest for a second casino development in Brisbane. This would be one of the three new casino licences, which will be tendered out in the state of Queensland.

-  We believe that Genting Bhd owns 2% of Echo Entertainment. Genting Hong Kong owns another 6.6% of Echo. Genting Group is currently waiting for approval to increase its stake in Echo above 10%.

Source: AmeSecurities