Results

• Above Expectations – Reported FY14 revenue and core PBT of RM17.5bn and RM4.6bn, respectively came in within expectations. However, FY14 core PATAMI of RM1.7bn came in above expectations, accounted for 114.4% and 107.2% of ours and consensus full year earnings.

Deviations

• Lower-than-expected minority interest and perpetual capital securities.

Dividends

• Declared final dividend of 3 sen/share, totaling FY14 dividend to 4 sen/share. This represents a payout and yield of 41.2% and 0.4%, respectively.

Highlights

• Gaming: All casinos except Malaysia recorded growth in FY14 revenue from higher volume of business in VIP segment. US on the other hand experience growth on the back of the commencement of Resorts World Bimini in June 2013. Higher payroll costs in Malaysia and US as well as operation challenges in Bimini have resulted in lower division EBITDA which was partially offset by higher EBITDA in Singapore and UK.

• Non-gaming: Hospitality in Resorts World Genting was affected due to lesser visitors arising from the closure of its outdoor theme park. Non-gaming revenue in Singapore was rather flattish as we believe this was due to diminishing novelty effect of its Marine Life Park.

• GenT’s FY14 power division earnings only came from its Banten power plant in Indonesia while FY13’s power division includes revenue from Meizhou Wan Power Plant in China.

• Plantation division revenue increased yoy in FY14 mainly due to higher crop production and palm kernel prices in Indonesia and growth in FFB production in Malaysia. EBITDA grew further on the back of lower costs and improved operational efficiencies.

• Revenue and EBITDA from O&G division was contributed by Genting CDX (57% participating interest by Genting CDX Singapore Pte Ltd) in China.

Risks

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

Forecasts

• We imputed the latest earnings revision from GenS, as well as adjusted our assumption for MIs and perpetual capital securities. As such, EPS for FY15-16 was adjusted marginally by -1.7% and +0.5%, respectively.

Rating

HOLD

Positives

• (1) Defensive stock; and (2) New sources ofearnings from international markets to drive earnings growth.

Negatives

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

Valuation

Post-adjustments to GenS’ TP, GenT’s TP is cut to RM9.42 based on SOP valuations. Given that total upside is now less than 10%, recommendation is now downgraded to HOLD.

Source: Hong Leong Investment Bank Research - 27 Feb 2015