• HLIB has a BUY rating on GENTING with an institutional TP of RM10.75 (+14.4% upside) based on our SOP-derived valuation after incorporating latest TP from its subsidiaries. We believe GENTING is a cheaper proxy to buy into GenM’s GITP growth and the excitement in Japan of GenS. We see lesser downside given its deep valuation and the unjustified holding company discount of ~30% with its subsidiaries poised to fare better with cleaner slate moving forward.

• Values emerging. GENTING’s share prices slid 50 sen or 5.0% from 52-week high of RM9.90 (21 Mar) to end at RM9.40 yesterday (or wiped off RM1.88bn market cap) in tandem with the KLCI consolidation. Sentiment was also dampened by the passing of the Malaysian Tourism Tax Bill on 6 April to impose tourism tax levied on a tourist staying at any accommodation premise made available by an operator. Based on HLIB estimates, the impact to GENTING’s FY17 PBT is minimal at <1%, assuming potential extra cost based on RM15 per room per night (kindly refer to separate report entitled Tourism Tax Bill 2017 dated 7 April 2017).

• Ripe for potential downtrend reversal amid bullish Harami formation. At RM9.40, GENTING’s valuation has turned attractive following recent sell-down, as it is only trading at 1.01x P/B (40% below 10-year average). We opine that such valuation has priced in most of the negatives and provided sufficient margin of safety to cushion further sharp decline.

• Although MACD is still flashing a negative signal, we believe a floor has been established near RM9.30 (6 April low) following last Friday’s 7 sen or 0.75% rebound, supported by the upticks in RSI and slow stochastic oscillators coupled with the formation of a bullish Harami pattern , indicating potential downtrend reversal. GENTING may resume its upward trajectory if share prices are able to stage a meaningful breakout above RM9.50 (30-d SMA) immediate resistance. Further upside targets are RM9.75 (28 Mar high) and RM10.00 psychological levels.

• On the flipside, a breakdown below RM9.30 will push prices lower towards RM9.17 (50-d SMA) and RM9.06 (50% FR) levels.

Source: Hong Leong Investment Bank Research - 10 Apr 2017