- We are upgrading Genting Bhd from HOLD to BUY with a lower discounted RNAV of RM8.20/share. We believe that Genting Bhd is trading at a huge discount of 40% to its RNAV per share of RM10.90/share (excluding Resorts World Las Vegas) presently.

- Genting Bhd is currently trading at a P/BV of 0.9x. At the low during the financial crisis in 2009, Genting Bhd’s P/BV was 0.77x.

- A P/BV of 0.77x would translate into a share price of RM5.52 for Genting Bhd. Since early-August 2015, Genting Bhd’s share price has fallen by 18.4%. Genting Bhd’s foreign shareholding level was a high 47% as at end-March 2015.

- Our fair value of RM8.20/share is based on a 25% discount to Genting Bhd’s RNAV and Genting Singapore’s (GenS) new fair value of S$0.90/share versus S$1.08/share previously. GenS accounts for 39% of Genting Bhd’s RNAV while Genting Malaysia (GenM) accounts for another 31%. Genting Bhd is presently trading at fully-diluted FY15F PE of 15.0x and FY16F PE of 14.9x.

- Genting Bhd’s 1HFY15 core results were within our earnings forecast and consensus estimates. We have tweaked Genting Bhd’s FY15F EPS forecast marginally.

- Included in Genting Bhd’s results were net fair value loss of RM568.2mil in respect of GenS’ equity linked instruments and impairment loss of RM165mil. Partly offsetting these was other income of RM806.9mil (1HFY14: RM347.4mil), which we believe consisted of forex gains and gain on disposal of financial assets.

- Genting Bhd is still going through the cost and details of Resorts World Las Vegas (RWLV). The design and development cost of the project are expected to be submitted to the Board of Directors by year-end. Construction of RWLV is anticipated to commence in mid- FY16F. RWLV is targeted for completion in mid-FY18F.

- Genting Bhd did not declare any dividend in 1HFY15. The group would only make a decision on dividend payments after the release of the full-year’s results in February 2016.

- We also gather that none of Genting Bhd’s borrowings are due for repayment anytime soon. Additionally, most of the group’s foreign borrowings are held by its overseas operations. There are no mismatches between the assets and liabilities of the group.

Source: AmeSecurities Research - 27 Aug 2015