Results

• Above expectations: FY17 revenue of RM9.3bn and core PATAMI of RM1.4bn (-8.9% YoY), accounting for 113.7% and 114.4% of HLIB and consensus full year estimates, respectively. The result was in line at EBITDA level.

Deviation

• The deviation at bottom line was mainly due to MI.

Dividends

• Declared a special dividend of 8 sen (ex-date: 12 th Mar) and proposed a final dividend of 5 sen, bringing FY17 total dividend to 17 sen. (FY16: 16.5 sen)

Highlights

• QoQ: Revenue improved by 12.1% but core PATAMI grew stronger by 86.0% mainly due to stronger performance from Malaysia on the back of higher business volume and win rate. This was partially offset by weaker performance from overseas operations.

• YoY: Revenue was up 11.4% on the back of higher contributions from all operations, except US operations. Core PATAMI improved by a greater magnitude of 43.0% on the back of higher revenue, lower payroll costs and effective tax rate.

• FY17: Revenue grew by 4.4% but core PATAMI declined by 8.9%, mainly due to lower contributions from Malaysia (higher cost and lower win rate) and UK operations (lower win rate and higher bad debt) coupled with higher depreciation charges.

• Overall, FY17 EBITDA margin for RWG came in lower due to higher payroll and utilities associated costs related to the opening of new facilities.

• Visitors’ growth remained healthy with 23.6m visitors in FY17 (+16% yoy including visit to GPO facilities).

• The encouraging improvement of EBITDA in 4Q17 was boosted by the newly opened VIP gaming space back in Nov 17, however management continues to guide an EBIDTA level of circa 33%.

• Management guided that the next facilities available will be the new VIP suites while the indoor theme park is estimated to be rolled out progressively in the 1H18, followed by 20 th

Century Fox theme park by year end.

Risks

• Foreign exchange risks.

• Execution risks

Forecasts

• Unchanged.

Rating

HOLD ↔ , TP: RM5.10 ↔

• The topline growth is hardly exciting despite recorded high visitors’ growth drawn by the new GITP facilities. Besides, EBITDA margin for RWG has eroded given the longer gestation period from escalating pre-opening expenses and delayed in opening of facilities.

Valuation

• Maintain HOLD with unchanged target price of RM5.10 based on SOP, implying a 10x EV/EBITDA.

Source: Hong Leong Investment Bank Research - 28 Feb 2018