KUALA LUMPUR (July 20): Maybank Investment Bank has maintained its “Buy” rating on Genting Bhd at RM4.20 but trimmed its EPS (earnings per share) estimates by 4%-24% and sum-of-parts target price (SOP-TP) to RM5.36 (from RM5.61) on slower-than-expected recovery at Genting Malaysia Bhd (GenM) and Genting Singapore Plc.

In a Wednesday (July 19) note, Maybank analyst Samuel Yin Shao Yang said that after a torrid 3Q2023 wherein the MYR depreciated to a recent low of RM4.68: US$1.00, the ringgit has recovered to RM4.54:US$1.00, as cooler inflation in the United States eased pressure on the Federal Reserve Board (FRB) to raise the Fed Funds Rates (FFR) further.

He said there is a strong correlation between the ringgit/USD and Genting’s premium/(discount) to SOP/share because of its high foreign shareholding.

“We notice that foreigners tend to buy/sell Genting when the ringgit appreciates/depreciates,” he said.

Yin estimates that Genting is currently trading at 65% below its SOP/share valuation (our SOP-TP is based on 60% discount to SOP/share).

“Our house view is that the ringgit will recover to RM4.15: US$1.00 towards end-FY2024E, as the FRB pivots away from more FFR hikes after end-FY2023E (the FRB has guided for another 50bps (basis points) hike in FFR by end-FY2023E).

“Thus and on balance of probabilities, we believe that Genting’s share price discount to SOP/share could narrow, going forward,” he said.

At the time of writing on Thursday (July 20), Genting added 0.48% or two sen to RM4.22, with 970,800 shares traded.