Results

Within Expectations – Reported FY13 core PATAMI of RM1.77bn came in within expectations, accounting for 98.2% and 97.8% of ours and estimates full year forecasts respectively.

Deviations

None.

Dividends

None.

Highlights

Gaming: YTD, all casinos except Genting Singapore recorded growth in revenue largely from the expansion in volume of business in premium players segment. Genting Singapore recorded lower revenue despite higher volume of business due to lower average hold rate throughout the year.

EBITDA-wise, Malaysia and Singapore were down due to higher costs (lower margins) while UK and US reported growth from higher revenue YTD.

Non-gaming: Hospitality in Resorts World Genting was affected due to lesser visitors arising from the closure of its outdoor theme park in Sept 2013. On the other hand, nongaming division in Singapore continued to experience healthy growth from both its Universal Studio Singapore (USS) and Marine Life Park (MLP).

GenT’s FY13 power division earnings only came from its Banten power plant in Indonesia while FY12’s power division includes revenue from Meizhou Wan Power Plant in China. Profit from Meizhou Wan has been reclassified as discontinued operations following the disposal of 51% stake in Fujian Pacific Electric Company Limited.

Increased revenue of the plantation division was from higher Indonesia contributions and property development division which more than offset lower contributions from the plantation segment in Malaysia.

Risks

1) Regulatory risk; 2) Weaker hold percentage; 3) Pandemic breakouts; 4) Appreciation of RM; and 5) Higherthan- expected cannibalisation from Marina Bay Sands (MBS) and Macau casinos.

Forecasts

We adjusted our forecasts to reflect GenP latest projections as well as RWNY’s net wins assumption to US$438/VLT/day from the strong net wins in FY13. Hence, EPS is marginally higher by 0.4% for FY14-16

Rating

BUY

Positives – (1) Defensive stock; and (2) New sources of earnings from international markets to drive earnings growth.

Negatives – (1) Highly regulated industry; and (2) Leisure and hospitality’s earnings highly dependable on luck factor and hold percentage

Valuation

Post-earnings revision, TP is raised slightly to RM12.14 (from RM12.13) based on SOP valuations. Maintain BUY.

Source: Hong Leong Investment Bank Research - 28 Feb 2014