- Maintain BUY on Genting Bhd with an unchanged fair value of RM8.20/share as Genting Malaysia’s (GenM) higher fair value of RM4.45/share compensated for Genting Singapore’s (GenS) lower target price of S$0.75/share. Our fair value is based on a holding company discount of 20% to Genting Bhd’s RNAV of RM10.30/share.

- In spite of the weak results of GenS and Genting Plantations (GenP), Genting Bhd’s results held up well in 3QFY15 due to foreign exchange gains on foreigndenominated assets.

- As a result, Genting Bhd’s other income climbed from RM506.2mil in 9MFY14 to RM1.7bil in 9MFY15. Also, the appreciation of the SGD against the RM benefited Genting Bhd, as GenS’ earnings are reported in SGD.

- We are keeping our BUY recommendation on Genting Bhd as its share price has not reflected the value of the group’s assets. Genting Bhd’s share price is at a steep 29.1% discount to its RNAV of RM10.30/share. Genting Bhd is currently trading at FY15F fully diluted PE of 17.6x and FY16F fully diluted PE of 15.3x. The group’s P/BV is 1.0x.

- We have revised Genting Bhd’s FY15F net profit downwards by 7.3% to account for GenS’ and GenP’s unexciting earnings. Recall that GenS was hit by a slew of impairments and loss in VIP casino market share in Singapore in 3QFY15. GenP was affected by lower CPO prices.

- GenS accounted for about 53.7% of Genting Bhd’s leisure and hospitality EBITDA in 9MFY15. GenM was the second highest earnings driver, accounting for 47.8% of the division’s EBITDA in 9MFY15.

- There has been a delay in the development of Resorts World Las Vegas (RWLV) as the cost of the project has not been finalised yet.

- Originally, the design and cost of the project were supposed to be submitted to the Board of Directors by year-end. We understand that management is still deciding on the phasing of the project i.e. which part of the project should commence construction first. Presently, construction of RWLV is targeted to commence in mid- FY16F while the completion date is expected to be mid- FY18F.

- Also, some structures at the RWLV are on track for completion by the end of this year. These include the parking complex and site office.

Source: AmeSecurities Research - 27 Nov 2015