• HLIB institutional research maintains BUY rating with SOP target price of RM9.81, or 26.9% upside . G enting’s share prices tumbled 14.4% from 6-month high of RM9.03 (20 July) to a low of RM7.55 (14 Nov) before ending at RM7.73 yesterday.

• Genting is currently trading at 14.6x FY17 P/E, about 42% discount against its peers’ 25x. We believe the fall and steep discount have priced in the concerns of foreign funds selloff, cost overruns for its Las Vegas project, uncertainty on the Japan casino bids, the progress of GITP at Genting Highlands coupled with unfavourable TauRx’s results for its Alzheimer’s study.

• In our view, the magnitude of discount on this cash rich leisure giant against its regional peers is unjustified at holding company level given its leverage play of a diversified business as it houses various business expansions which are set to bear fruit from 2017 onwards.

• Limited downside. We may witness near term sideways consolidation as daily and weekly MACD histograms remain in red. However, downside risks are limited owing to deeply oversold daily slow stochastic and undemanding valuations. Key supports are RM7.66 (weekly lower Bollinger band) and RM7.55. Once this pattern ends, we expect prices to stage a breakout above the downtrend line near RM7.87, followed by the RM8.00 psychological barrier and our LT objective at RM8.35 (200-d SMA). Cut loss at RM7.53.

Source: Hong Leong Investment Bank Research - 28 Dec 2016