KUALA LUMPUR (March 11): Genting Bhd shares touched an intraday high of RM5.20 — the highest in four years — in morning trade on Monday, fuelled by optimism over its 20%-associate TauRx Pharmaceuticals Ltd’s trial drug to combat Alzheimer's disease.

After climbing as much as 5.05% or 25 sen, the stock pared gains to close at RM5.10 for a market value of RM19.64 billion, up 3% or 15 sen against last Friday’s (March 8) closing price of RM4.95.

Genting was still among the top gainers and most active stocks on Bursa Malaysia, with 36.55 million shares changing hands, more than double the 18.23 million shares the previous trading day as well as above its 200-day average of 5.08 million shares.

Compared to a year ago, the stock has gained 14.34%, adding RM2.46 billion to its market value. In March this year alone, the stock is up by 6.92%.

Last Friday, Singapore-based TauRx said new data showed that its trial drug to combat Alzheimer's disease has “sustained benefits” across the disease spectrum from early to moderate dementia.

However, a head of a research house cautioned about Genting’s Alzheimer's drug venture, after the US Food and Drug Administration (FDA) delayed its decision on Eli Lilly’s Alzheimer’s drug experimental treatment for early Alzheimer's disease.

This marks the second delay for the eagerly anticipated treatment by the FDA after it declined to grant accelerated approval for the medicine a year ago, Reuters reported. The US FDA will hold a meeting of outside experts to discuss its safety and efficacy but no date has been set for the meeting.

Worth noting is that Genting’s share price rally comes after Maybank Investment Bank Research said its target price for the group could be revised upward to RM9.40 under the blue sky scenario where TauRx’s hydromethylthionine mesylate (HMTM) drug is approved and the pharmaceutical company is valued at US$15 billion (RM70.23 billion), up from US$1 billion currently.

When contacted, its analyst Samuel Yin Shao Yang explained that his target price for Genting is now maintained at RM5.73, and the additional potential upside of RM3.67 or 64% — based on RM9.40 — is pending until more clarity from the respective regulatory authorities including US FDA and European Medicines Agency.

Yin noted that HMTM is eligible for fast track consideration by regulators such as FDA. With that, he is hopeful that TauRx’s HMTM drug will get approval by year end. After ascribing 60% discount, TauRx accounts for only nine sen out of its target price of RM5.73 for Genting.

According to Bloomberg, of the 16 analysts covering the stock, 14 have “buy” calls on Genting while two recommended “hold”. The average 12-month target price is RM5.95, implying an upside of 16.67% compared to Monday’s closing price of RM5.10.

On a separate note, Hong Leong Investment Bank (HLIB) Research was positive on Genting's core business prospect as it believes the group is on track for sustained recovery momentum, with multiple factors in play contributing to its positive outlook. This was driven by the increasing frequencies of global flights (particularly outbound flights from China), as well as the visa-free travel pact between China and both Malaysia and Singapore.

Hence, HLIB has revised upward its earnings forecast by 3% to RM1.76 billion for the financial year ending Dec 31, 2024 (FY2024) and by 6% to RM1.86 billion for FY2025, according to its March 1 research note.

Notably, HLIB has upgraded its target price for Genting to RM7.12, from RM6.96 previously, due to the group being undervalued as it does not sufficiently capture the potential recovery of both its subsidiaries, Genting Singapore Ltd and Genting Malaysia Bhd.

“Furthermore, it is important to point out that Genting is currently trading at an 8% discount to the assessed value of its stake in Genting Singapore,” it added.

Genting posted an annual net profit of RM929.2 million in FY2023 against a net loss of RM299.91 million in FY2022, as annual revenue expanded 21.15% to RM27.12 billion from RM22.39 billion a year ago.

This came after it posted a net profit of RM150.1 million in the fourth quarter of FY2023, against a net loss of RM168.72 million a year ago. Quarterly revenue grew 14.2% year-on-year to RM7.27 billion from RM6.36 billion.