• Trading opportunity resurfaces after recent selldown. GENM’s share GENM’s share prices tumbled 13.1% from 3M high of RM6.19 from 25 July to end at RM5.38 last Friday, following a weak 2Q17 results, concerns of a looming one-off impairment risk on its US tribal casino project investment and higher operating costs associated with the phased opening of GITP. Sentiment was also dampened by the delay of the 20th Century Fox World Theme Park opening to 1H18. Having said that, the RM10.4bn 10-year GITP development has seen progressive opening of retail space, restaurants and casino floor since end-2016. This coupled with the significant tax allowance should contribute to bottom-line.

• Currently, GENM is trading at 15.1x FY18 P/E (7% below its average 10-year average P/E of 16.3x), supported by ~10% earnings CAGR for FY16-19. We believe such valuations and grossly oversold positions have largely priced in most of the negatives, providing sufficient margin of safety to cushion further plunge in share prices.

• Ripe for downtrend reversal? Given the formation of long-legged Doji (weekly chart) and grossly oversold weekly slow stochastic, we expect share prices to stage a potential technical rebound in the near term. A decisive breakout above the immediate resistance of RM5.50 (200-d SMA) will likely lift share prices higher towards RM5.66 (38.2% FR) and our LT objective at RM5.83 (50-d SMA). On the flip side, key supports are RM5.30 and RM5.21 (61.8% FR). Cut loss at RM5.17.

Source: Hong Leong Investment Bank Research - 9 Oct 2017